Banking Crises and Regulations: Terms and Definitions, Quizzes of Economics

Download Banking Crises and Regulations: Terms and Definitions and more Quizzes Economics in PDF only on Docsity! TERM 1 Suspension of Payments DEFINITION 1 refusal by bank to allow withdrawals by depositors gives bank time to reassure depositors and increase its liquid assets during bank run TERM 2 Bank Panic DEFINITION 2 simultaneous runs at many individual banks severe bank panics in 1930's TERM 3 Deposit Insurance DEFINITION 3 government guarantee to compensate depositors for their losses when a bank fails prevents bank runs bc gives depositors confidence their money is safe increases moral hazard bc reduces depositors' incentives to monitor banks so government limits coverage of deposit insurance makes banking crises more likely TERM 4 Federal Deposit Insurance Corporation (FDIC) DEFINITION 4 government agency that insures deposits at U.S. commercial banks and savings institutions TERM 5 Industrial Loan Company DEFINITION 5 financial institution that performs many functions of a commercial bank may be owned by a nonfinancial firm TERM 6 Capital Requirements DEFINITION 6 regulations setting minimum levels of capital that banks must hold U.S. banks must hold at least 5% of total assets in capital TERM 7 Basel Accord DEFINITION 7 1968 agreement that sets international standards for bank capital requirements TERM 8 Bank Supervision DEFINITION 8 monitoring of banks' activities by government regulators TERM 9 Call Report DEFINITION 9 quarterly financial statement includes balance sheet and income statement banks submit to regulators as part of bank supervision TERM 10 Bank Examination DEFINITION 10 visit by regulators to a bank's headquarters to gather information on the bank's activities part of bank supervision