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Critically discuss the contribution economic theory has have got to the understanding of bank behaviour? Hamzeh Walid Shamaileh Hui Qian Zhuoyi Wang & Zi Zhi (In alphabetical order) Cardiff problem organisation School: Domestic & International Banking recordnstration Day May.2012 wherefore do we need a enlighten theory for banking? * These theories of banking attain a very special importation in the political economy of banking * They position banks on the stem of market conditions such as number of banks in the market, postulate rates, information availability, financial self-direction to the institutions, transaction costs, and nature of their banking ope rations * providing experience into bank behavior ?net interest margin ? reliance crunch ? credit rationin?securitization crystallize involution MARGIN * definition * gain interest margin usually is the measure of how golden is a bank investment decision compared to its debt situation * a negative value shows that banks had had a bad investment decisions demo that interest expenses were much larger that investment returns, while a irrefutable value shows that banks had an optimal investment decisions gaining it profits and irrefutable returns for that period CALCULATIONS * Net interest margin (NIM) * Total play Income - Total Interest Expense/average earning assets * banks has deposits of 100$ and pays 10$ interest on them and gain 20$ of interest or return of investment on them so 20-10/100=.10% NIM mellowness OF NIM * NIM is usually star of the main aspects in evaluating the bank . * care system, evaluating what is a good precaution and a bad one * positiveness of the bank. * optimal investment decisions by the bank * liquid state position to go over an efficient liquidity management and lowering liquidity ratio thus increasing NIM. DETERMINISTS OF NE T INTEREST MARGIN (internatl factors) ! * Net interest spreads NIS which is the average balance between...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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