You are previewing Modern Financial Systems: Theory and Applications.
O'Reilly logo
Modern Financial Systems: Theory and Applications

Book Description

A valuable guide to the essential elements of modern financial systems

This book offers you a unified theory of modern financial system activity. In it, author Edwin Neave distills a large body of literature on financial systems, the institutions that comprise the systems, and the economic impacts of the systems' operation. Through non-technical summaries, Neave provides you with a primer on how financial systems work, as well as how the many parts of any financial system relate to each other. He does so in a straightforward manner, with an emphasis on economic principles and the relationship between various aspects of financial system activity.

  • Discusses financial governance and explains how financial markets and institutions complement each other

  • Identifies the economic forces at work within financial systems and explores how they determine system organization and change

  • Offers a theoretical survey of financial activity and its application to numerous practical situations

  • Explains both static financial system organization and the dynamics of financial system evolution

Table of Contents

  1. The Frank J. Fabozzi Series
  2. Title Page
  3. Copyright Page
  4. Dedication
  5. Preface
  6. PART One - Theoretical Overview
    1. CHAPTER 1 - Introduction
      1. AIMS AND APPROACH
      2. IMPORTANCE OF FINANCIAL SYSTEM ANALYSIS
      3. DIFFERENCES AMONG FINANCIAL SYSTEMS: OVERVIEW
      4. FUNCTIONS AND GOVERNANCE
      5. FINANCIAL SYSTEM ORGANIZATION
      6. FINANCIAL SYSTEM CHANGE
      7. REFERENCES
      8. TERMS
    2. CHAPTER 2 - Financial System Functions
      1. INTRODUCTION
      2. CLEARING AND SETTLING PAYMENTS
      3. POOLING RESOURCES
      4. TRANSFERRING RESOURCES
      5. MANAGING RISKS
      6. INFORMATION PRODUCTION
      7. MANAGING INCENTIVES
      8. FUNCTIONAL-STRUCTURAL APPROACH
      9. REFERENCES
      10. TERMS
    3. CHAPTER 3 - Financial System Governance
      1. INTRODUCTION
      2. GOVERNANCE MECHANISMS
      3. TYPES OF DEALS
      4. ALIGNMENT
      5. FINANCIAL SYSTEM ORGANIZATION
      6. REFERENCES
      7. TERMS
    4. CHAPTER 4 - Financial System Organization and Change
      1. TRENDS IN PROVIDING FINANCIAL SERVICES
      2. PROFIT OPPORTUNITIES AND CHANGE
      3. REFERENCES
  7. PART Two - Market versus Nonmarket Governance
    1. CHAPTER 5 - Market Governance
      1. FUNCTIONS OF MARKETS
      2. DESCRIPTIVE AND ECONOMIC CHARACTERISTICS
      3. MARKET EFFICIENCY
      4. INFORMATION PRODUCTION
      5. LIQUIDITY
      6. SECURITIZATION OF ILLIQUID ASSET PORTFOLIOS
      7. REFERENCES
      8. TERMS
    2. CHAPTER 6 - Intermediation and Internal Governance
      1. INTERMEDIARIES AND VALUE CREATION
      2. INTERMEDIARIES AND LIQUIDITY
      3. INFORMATION SHARING
      4. DELEGATED MONITORING
      5. INTERMEDIARY INFORMATION PROCESSING
      6. INTERNAL GOVERNANCE
      7. REFERENCES
      8. APPENDIX 6A: INTERMEDIARY INFORMATION PROCESSING: RESULT DERIVATIONS
      9. APPENDIX 6B: FORMAL STATEMENT OF PROBLEM
    3. CHAPTER 7 - Terms of Deals
      1. COSTS OF DEALS
      2. INFORMATIONAL CONDITIONS
      3. MORAL HAZARD
      4. COMPLETE CONTRACTS
      5. INCOMPLETE CONTRACTS: INTRODUCTION
      6. INCOMPLETE CONTRACTS: FURTHER COMMENTS
      7. REFERENCES
  8. PART Three - Asset Prices and Market Relations
    1. CHAPTER 8 - Pricing Stocks and Bonds
      1. PROFIT-SEEKING ELIMINATES ARBITRAGE OPPORTUNITIES
      2. PRICING SECURITIES RELATIVE TO EACH OTHER
      3. CALCULATING RISK-NEUTRAL PROBABILITY MEASURES
      4. USING RISK-NEUTRAL PROBABILITIES FOR SECURITIES VALUATION
      5. DEBT VERSUS EQUITY
      6. APPLICATION: BOND VALUATION AND MARKET RISK
      7. REFERENCES
      8. TERMS
    2. CHAPTER 9 - Pricing Derivatives by Arbitrage
      1. INTRODUCTION
      2. FORWARDS
      3. OPTIONS
      4. DEBT, EQUITY, AND OPTIONS
      5. FUTURES
      6. VALUING A CREDIT DEFAULT SWAP
      7. REFERENCES
    3. CHAPTER 10 - Markets with Impediments to Arbitrage
      1. SECURITIES MARKETS AND LIQUIDITY
      2. MARKET SEGMENTATION
      3. CONSEQUENCES OF SEGMENTATION
      4. INFORMATIONAL ASYMMETRIES AND CREDIT MARKET EQUILIBRIUMS
      5. MARKET FAILURE
      6. FINANCIAL SYSTEM EXTERNALITIES
      7. REFERENCES
  9. PART Four - Applications: Market Activity
    1. CHAPTER 11 - Securities, Bond, and Mortgage Markets
      1. ECONOMIC DIFFERENCES AMONG MARKETS
      2. MONEY MARKET
      3. EQUITY MARKETS
      4. BOND MARKETS
      5. RESIDENTIAL MORTGAGE MARKETS
      6. REFERENCES
      7. TERMS
    2. CHAPTER 12 - Markets for Trading Risks
      1. INTRODUCTION
      2. OPTIONS MARKETS
      3. FUTURES MARKETS
      4. MARKET EVOLUTION
      5. REFERENCES
      6. TERMS
    3. CHAPTER 13 - Exchange Rates and Markets
      1. INTRODUCTION
      2. EXCHANGE RATE RELATIONS
      3. FOREIGN EXCHANGE MARKETS
      4. EXCHANGE RISK MANAGEMENT
      5. EXCHANGE RATE MANAGEMENT
      6. REFERENCES
      7. TERMS
  10. PART Five - Applications: Pooled Investments
    1. CHAPTER 14 - Marketable Securities Portfolios
      1. INTRODUCTION
      2. MANAGING PORTFOLIO RETURN
      3. MUTUAL FUNDS
      4. HEDGE FUNDS
      5. VALUE AT RISK
      6. REFERENCES
      7. TERMS
    2. CHAPTER 15 - Nonmarketable Securities Portfolios
      1. CHARACTERISTICS OF ILLIQUID PORTFOLIOS
      2. MANAGING EARNINGS RISK
      3. MANAGING CLOSELY HELD INVESTMENTS
      4. SECURITIZATION AND GOVERNANCE
      5. MORTGAGE POOLS
      6. DEFAULT INSURANCE
      7. REFERENCES
      8. TERMS
  11. PART Six - Applications: Intermediation
    1. CHAPTER 16 - Principles of Intermediation
      1. INTRODUCTION
      2. A STRATEGIC MANAGEMENT MODEL
      3. ECONOMICS OF INTERMEDIATION
      4. OPERATING ISSUES
      5. REFERENCES
      6. TERMS
      7. APPENDIX: TRADITIONAL MODEL OF LIQUIDITY MANAGEMENT
    2. CHAPTER 17 - Management Practice: Domestic Institutions
      1. BANKS
      2. INVESTMENT BANKS
      3. NEAR-BANKS
      4. INSURANCE COMPANIES
      5. PENSION FUNDS
      6. LENDING INTERMEDIARIES
      7. VENTURE CAPITAL COMPANIES
      8. EVOLUTION
      9. REFERENCES
      10. TERMS
    3. CHAPTER 18 - International Banking and Banking Markets
      1. INTERNATIONAL BANKING
      2. INVESTMENT BANKING
      3. FINANCIAL CONGLOMERATES
      4. EUROMARKET ACTIVITY
      5. REFERENCES
      6. TERMS
  12. PART Seven - Industry Organization and Regulation
    1. CHAPTER 19 - Banking Market Structure: Models and Empirical Research
      1. BANKING UNDER PERFECT COMPETITION
      2. BANKING UNDER OLIGOPOLY
      3. MONOPOLISTIC COMPETITION AND THE NUMBER OF BANKS
      4. EMPIRICAL ASPECTS OF BANKING COMPETITION
      5. MARKET STRUCTURE AND COMPETITION
      6. REFERENCES
    2. CHAPTER 20 - Bank Runs and Systemic Risk
      1. LIQUIDITY PROVISION AND SYSTEM STABILITY
      2. DEPOSIT INSURANCE
      3. INFORMATION PRODUCTION
      4. SYSTEM RISKS AND CURRENT POLICY ISSUES
      5. REFERENCES
      6. APPENDIX 20A: SOLVENCY REGULATIONS
      7. APPENDIX 20B: CLOSURE DECISIONS
    3. CHAPTER 21 - Financial Activity and Capital Formation
      1. ADVERSE SELECTION AND CREDIT CONDITIONS
      2. MORAL HAZARD
      3. FINANCIAL CYCLES
      4. BANKS, MARKETS, AND ECONOMIC ACTIVITY
      5. EQUILIBRIUM, FINANCIAL STRUCTURE, AND ECONOMIC ACTIVITY
      6. FINANCIAL STRUCTURE AND ECONOMIC ACTIVITY
      7. REFERENCES
    4. CHAPTER 22 - Financial Regulation
      1. AIMS AND APPROACHES
      2. INDUSTRIES
      3. REGULATING INTERNATIONAL ACTIVITY
      4. TOWARD THE FUTURE
      5. DEALING WITH THE GLOBAL CREDIT AND LIQUIDITY CRISES
      6. REFERENCES
      7. TERMS
      8. APPENDIX: THE MARKET TURMOIL OF 2007-2008
  13. References
  14. Index