MONEY, BANKING, AND FINANCIAL MARKETS
m m m m
LaurencemM.mBall
JohnsmHopkinsmUniversit
ym1429260807
Worthm Publishers
,Senior mPublisher:mCraigmBleyer m Ac
quisitionsmEditor:mSarahmDorger m Se
nior mMarketingmManager:mScottmGuile
MarketmResearchmandmDevelopment:mStevenmRigolosi m Devel
opmentmEditor:mBarbaramBrooks
DevelopmentmEditor,mMediamandmSupplements:mMariemMcHal
em ConsultingmEditor:mPaulmShens a
AssociatemEditor:mMatthewmDriskil
lm PhotomEditor:mCeciliamVaras
PhotomResearcher:mJuliemTess
er m ArtmDirector:mBabsmRei
ngold
Senior mDesigner,mCover mDesigner:mKevinmKall
m Interior mDesigner:mLissi mSigillo
AssociatemManagingmEditor:mTracey mKuehnm P
rojectmEditors:mDanamKasowitz
LauramHakala,mPre-
PressPMG m ProductionmManager:mBarbaramA
nnemSeixasm Composition:mPre-PressPMG
PrintingmandmBinding:mRR mDonnelley
Cover mPhotos:mSecondmBank mof mthemUnitedmStatesmPHILADELPHIA mUSA,m© mAflo mCo.mLtd./
Alamy m Goldmcertificatemandmcoins,m© mCorbismPremium mRF/Alamy
Euromnote,mImagemsourcemphotography/Vee
r m US m10mdollars,mVeer
SouthmAfricanmrand,mVeer
Library mof mCongressmControlmNumber:m2008926
450m ISBN-13:m978-0-7167-5934-8
ISBN-10:m 0-7167-5934-9
© m2009mby mWorthmPublish
ersm Allmrightsmreserved
PrintedminmthemUnitedmStatesmof mAme
ricam Firstmprinting
WorthmPublishers
m 41mMadisonmAve
nue
NewmYork,mNYm10010m www.wor
thpubli shers.com
, Table of Contents
m m
preface ix
PARTmI: m FOUNDATIONS 1
chapterm1:m The mFinancial mSystem 3
chapterm2:m Moneymand mCentralmBanks 25
PARTm II: m FINANCIALm MARKETS 53
chapterm3:m AssetmPrices mand mInterestmRates 55
chapterm4:m WhatmDetermines mInterestmRates? 83
chapterm5:m Securities mMarkets 119
chapterm6:m ForeignmExchange mMarkets 153
PARTmIII: m BANKING 185
chapterm7:m Asymmetric mInformation minmthemFinancial mSystem 187
chapterm8:m The mBanking mIndustry 213
chapterm9:m The mBusiness mofmBanking 241
chapterm10:m BankmRegulation 273
PARTm IV: m MONEYm ANDm THE m ECONOMY 299
chapterm11:m The mMoneymSupplymand mInterestmRates 301
chapterm12:m Short-RunmEconomic mFluctuations 329
chapterm13:m Economic mFluctuations,mMonetarymPolicy, mand mthemFinancial mSystem 373
chapterm14:m Inflation mandmDeflation 401
PARTm V: m MONETARYm POLICY 431
chapterm15:m Policies mformEconomic mStability 433
chapterm16:m MonetarymInstitutions mand mStrategies 463
chapterm17:m MonetarymPolicymand mExchange mRates 493
chapterm18:m Financial mCrises 523
glossary 545
index 571
iii
,
m m m m
LaurencemM.mBall
JohnsmHopkinsmUniversit
ym1429260807
Worthm Publishers
,Senior mPublisher:mCraigmBleyer m Ac
quisitionsmEditor:mSarahmDorger m Se
nior mMarketingmManager:mScottmGuile
MarketmResearchmandmDevelopment:mStevenmRigolosi m Devel
opmentmEditor:mBarbaramBrooks
DevelopmentmEditor,mMediamandmSupplements:mMariemMcHal
em ConsultingmEditor:mPaulmShens a
AssociatemEditor:mMatthewmDriskil
lm PhotomEditor:mCeciliamVaras
PhotomResearcher:mJuliemTess
er m ArtmDirector:mBabsmRei
ngold
Senior mDesigner,mCover mDesigner:mKevinmKall
m Interior mDesigner:mLissi mSigillo
AssociatemManagingmEditor:mTracey mKuehnm P
rojectmEditors:mDanamKasowitz
LauramHakala,mPre-
PressPMG m ProductionmManager:mBarbaramA
nnemSeixasm Composition:mPre-PressPMG
PrintingmandmBinding:mRR mDonnelley
Cover mPhotos:mSecondmBank mof mthemUnitedmStatesmPHILADELPHIA mUSA,m© mAflo mCo.mLtd./
Alamy m Goldmcertificatemandmcoins,m© mCorbismPremium mRF/Alamy
Euromnote,mImagemsourcemphotography/Vee
r m US m10mdollars,mVeer
SouthmAfricanmrand,mVeer
Library mof mCongressmControlmNumber:m2008926
450m ISBN-13:m978-0-7167-5934-8
ISBN-10:m 0-7167-5934-9
© m2009mby mWorthmPublish
ersm Allmrightsmreserved
PrintedminmthemUnitedmStatesmof mAme
ricam Firstmprinting
WorthmPublishers
m 41mMadisonmAve
nue
NewmYork,mNYm10010m www.wor
thpubli shers.com
, Table of Contents
m m
preface ix
PARTmI: m FOUNDATIONS 1
chapterm1:m The mFinancial mSystem 3
chapterm2:m Moneymand mCentralmBanks 25
PARTm II: m FINANCIALm MARKETS 53
chapterm3:m AssetmPrices mand mInterestmRates 55
chapterm4:m WhatmDetermines mInterestmRates? 83
chapterm5:m Securities mMarkets 119
chapterm6:m ForeignmExchange mMarkets 153
PARTmIII: m BANKING 185
chapterm7:m Asymmetric mInformation minmthemFinancial mSystem 187
chapterm8:m The mBanking mIndustry 213
chapterm9:m The mBusiness mofmBanking 241
chapterm10:m BankmRegulation 273
PARTm IV: m MONEYm ANDm THE m ECONOMY 299
chapterm11:m The mMoneymSupplymand mInterestmRates 301
chapterm12:m Short-RunmEconomic mFluctuations 329
chapterm13:m Economic mFluctuations,mMonetarymPolicy, mand mthemFinancial mSystem 373
chapterm14:m Inflation mandmDeflation 401
PARTm V: m MONETARYm POLICY 431
chapterm15:m Policies mformEconomic mStability 433
chapterm16:m MonetarymInstitutions mand mStrategies 463
chapterm17:m MonetarymPolicymand mExchange mRates 493
chapterm18:m Financial mCrises 523
glossary 545
index 571
iii
,
