ECON282 Lecture Notes - Lecture 8: Securitization
30 Jan 2018
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Responsibility: managing interest rates (keeping them as low as possible) They help monitor financial system- whether gov"t is doing ok, anything wrong. Ba nks don"t have a lot of money on hand, if they need money, the central. Loans are the biggest asset of banks (~ 99. 9 %) Makes them risky but very important to country. Leverage rate is 20 for most banks in canada. S uppos e you made a 20% down payment on a hous e on j anuary 1, 2013, and on j anuary 1, 2014 you decided to s ell the hous e. if the price of your hous e increas ed by 10% , the return on your inves tment in the hous e would be. Banks only have 5% of money on hand. If more than 5% want their money back, the bank doesn"t have money to give back --> declare bankruptcy.
