MONEY, BANKING, AND FINANCIAL MARKETS
Laurence M. Ball
Johns Hopkins University
1429260807
Worth Publishers
,Senior Publisher: Craig Bleyer
Acquisitions Editor: Sarah Dorger
Senior Marketing Manager: Scott Guile
Market Research and Development: Steven Rigolosi
Development Editor: Barbara Brooks
Development Editor, Media and Supplements: Marie McHale
Consulting Editor: Paul Shensa
Associate Editor: Matthew Driskill
Photo Editor: Cecilia Varas
Photo Researcher: Julie Tesser
Art Director: Babs Reingold
Senior Designer, Cover Designer: Kevin Kall
Interior Designer: Lissi Sigillo
Associate Managing Editor: Tracey Kuehn
Project Editors: Dana Kasowitz
Laura Hakala, Pre-PressPMG
Production Manager: Barbara Anne Seixas
Composition: Pre-PressPMG
Printing and Binding: RR Donnelley
Cover Photos: Second Bank of the United States PHILADELPHIA USA, © Aflo Co. Ltd./Alamy
Gold certificate and coins, © Corbis Premium RF/Alamy
Euro note, Image source photography/Veer
US 10 dollars, Veer
South African rand, Veer
Library of Congress Control Number: 2008926450
ISBN-13: 978-0-7167-5934-8
ISBN-10: 0-7167-5934-9
© 2009 by Worth Publishers
All rights reserved
Printed in the United States of America
First printing
Worth Publishers
41 Madison Avenue
New York, NY 10010
www.worthpublishers.com
, Table of Contents
preface ix
PART I: FOUNDATIONS 1
chapter 1: The Financial System 3
chapter 2: Money and Central Banks 25
PART II: FINANCIAL MARKETS 53
chapter 3: Asset Prices and Interest Rates 55
chapter 4: What Determines Interest Rates? 83
chapter 5: Securities Markets 119
chapter 6: Foreign Exchange Markets 153
PART III: BANKING 185
chapter 7: Asymmetric Information in the Financial System 187
chapter 8: The Banking Industry 213
chapter 9: The Business of Banking 241
chapter 10: Bank Regulation 273
PART IV: MONEY AND THE ECONOMY 299
chapter 11: The Money Supply and Interest Rates 301
chapter 12: Short-Run Economic Fluctuations 329
chapter 13: Economic Fluctuations, Monetary Policy, and the Financial System 373
chapter 14: Inflation and Deflation 401
PART V: MONETARY POLICY 431
chapter 15: Policies for Economic Stability 433
chapter 16: Monetary Institutions and Strategies 463
chapter 17: Monetary Policy and Exchange Rates 493
chapter 18: Financial Crises 523
glossary 545
index 571
iii
,
Laurence M. Ball
Johns Hopkins University
1429260807
Worth Publishers
,Senior Publisher: Craig Bleyer
Acquisitions Editor: Sarah Dorger
Senior Marketing Manager: Scott Guile
Market Research and Development: Steven Rigolosi
Development Editor: Barbara Brooks
Development Editor, Media and Supplements: Marie McHale
Consulting Editor: Paul Shensa
Associate Editor: Matthew Driskill
Photo Editor: Cecilia Varas
Photo Researcher: Julie Tesser
Art Director: Babs Reingold
Senior Designer, Cover Designer: Kevin Kall
Interior Designer: Lissi Sigillo
Associate Managing Editor: Tracey Kuehn
Project Editors: Dana Kasowitz
Laura Hakala, Pre-PressPMG
Production Manager: Barbara Anne Seixas
Composition: Pre-PressPMG
Printing and Binding: RR Donnelley
Cover Photos: Second Bank of the United States PHILADELPHIA USA, © Aflo Co. Ltd./Alamy
Gold certificate and coins, © Corbis Premium RF/Alamy
Euro note, Image source photography/Veer
US 10 dollars, Veer
South African rand, Veer
Library of Congress Control Number: 2008926450
ISBN-13: 978-0-7167-5934-8
ISBN-10: 0-7167-5934-9
© 2009 by Worth Publishers
All rights reserved
Printed in the United States of America
First printing
Worth Publishers
41 Madison Avenue
New York, NY 10010
www.worthpublishers.com
, Table of Contents
preface ix
PART I: FOUNDATIONS 1
chapter 1: The Financial System 3
chapter 2: Money and Central Banks 25
PART II: FINANCIAL MARKETS 53
chapter 3: Asset Prices and Interest Rates 55
chapter 4: What Determines Interest Rates? 83
chapter 5: Securities Markets 119
chapter 6: Foreign Exchange Markets 153
PART III: BANKING 185
chapter 7: Asymmetric Information in the Financial System 187
chapter 8: The Banking Industry 213
chapter 9: The Business of Banking 241
chapter 10: Bank Regulation 273
PART IV: MONEY AND THE ECONOMY 299
chapter 11: The Money Supply and Interest Rates 301
chapter 12: Short-Run Economic Fluctuations 329
chapter 13: Economic Fluctuations, Monetary Policy, and the Financial System 373
chapter 14: Inflation and Deflation 401
PART V: MONETARY POLICY 431
chapter 15: Policies for Economic Stability 433
chapter 16: Monetary Institutions and Strategies 463
chapter 17: Monetary Policy and Exchange Rates 493
chapter 18: Financial Crises 523
glossary 545
index 571
iii
,
