PART IIIFinancial Intermediation & Banking

Objectives of Part III

Part III explores the financial intermediation in detail and introduces an analytical framework to understand how banks operate.• Present a balance sheet of bank• Introduce T-account to understand banking

operation• Explain assets, liabilities, and capital

management of banks and analyze recent financial crisis

• Discuss roles of financial regulation

Outline of Part III

• Bank Management (Unit 18, 19)• Banking Industry and Regulation (Unit 20)

Analytical Framework in Part III

Building blocks of analysis of banking operation• Balance sheet of banks• T-account of banking operation• Assets, liabilities, and capital management

of banks• Economic model of behavior of financial

institutions responding to financial regulation