The authors concluded that the

The authors concluded that the "myth" - the trap of thinking that has dominated some of the mainstream banking and global financial sector reform obstacles. From the article-length story "The Parade of the Bankers' New Clothes Continues: 23 Flawed Claims Debunked" (Parade of New Jersey's bankers continued: Chapter refutes claim 23 Do Wrong - free download from this site) by. financial economist, said two people are playing a greater role in the debate on financial reform included. Dr. Anas ADMIRE come (Anat Admati) and. Dr. Martin city kitchen Henry Vick (Martin Hellwig) users. author of The Bankers' New Clothes ("new coat of bankers").
Atwood Helix wigs come with two economists who pioneered the regulator out urges global banking sector and the management of the banking sector city kitchen reform in a meaningful and lasting than before. With the increasing city kitchen level of "minimum capital" that banks are required compared to total liabilities.
What's wrong? Both authors describe the three myths (see earlier) to prove that the particular case of the theory. Offers Mardi Giuliani - Miller. (Modigliani-Miller theorem) that bankers like to raise claims. Mix between debt and equity does not have any effect. The value of the company and the cost of funding it. Is true only in the case of the South. "Extraordinary assumption" purposes as "the most important findings of this theory is. In the financial markets work well. Yield investors demand depends on the level of risk. And risk (As well as the rate of return that reflects the risk level) of any securities (such as shares) issued by the company. It depends on the mix of debt and equity. city kitchen In other words, The company has more debt relative to equity. The risk is even higher. Investors will demand even higher rates of return on investment. "
Indeed, the logic of modern Sephardic Giuliani - Miller. Works well with equity and loan banks in the credit markets and bond markets. Banks interact with the same group of investors who bought stock and bonds of other companies. These investors city kitchen valued stocks and bonds of banks in the context of their own portfolio. Using the same criteria city kitchen to evaluate all investments. The logic is that the costs and risks in the funding of investors based on a combination of debt and equity of the bank. Applied in bank loans from other financial institutions as well.
Both authors emphasized that Banks, like other companies, are owned by the company or its shareholders. Choose whether to use equity shareholders city kitchen much. How much to borrow Unlike other companies, are likely to be experiencing financial difficulties or even bankruptcy on a massive high debt. Have little equity
There is a conflict between the interests of creditors and debtors. The distortions and inefficiencies of debt is too high then seen in the banking industry than the other. People who argue that banks "Unlike other businesses," and tries to justify the use of high debt. Banks are in the business Often ignored or made invisible distortions and inefficiencies that arise - and when the bank in question. Taxpayers or society, it is often the people who have to bear the loss.
What's wrong? This myth is based on the use of the word "money" wrong meaning. The idea that banks "produced" or "created" money is based on the observation that a person city kitchen can convert deposits city kitchen into cash easily. With the withdrawal of And it looked that the money deposited in the bank is similar to cash. Can be used to deposit the cost as well as signing checks. For this reason, city kitchen credit card or financial economist called the cash in hand and deposits in savings accounts, the "money supply".
However, the account was included in the economics of it. That does not mean the same as cash savings account. The most important difference is that the deposits are "owed" a form - a debt which the deposit is payable. The debtor bank Banks are obligated to pay money to the depositors. city kitchen Whenever he or she wants withdrawal. If the bank does not repay the money. The problem is then In contrast, the Cash in the form of coins and bank notes printed in the distribution system is not a "debt" of anyone.
From the bank's perspective The main difference between the deposits and other liabilities not deposit "money-like", but that is an issue. Banks Delivery Services city kitchen To the depositors are paid through bank checks and credit cards. Or automatic cash machine (ATM), enabling customers to withdraw at any time. Demand deposits of individuals depend on these services. The interest rates that banks offer. The level of risk that the bank is insolvent or no refund of deposit.
What's wrong? This myth is based on the assumption that the equity capital of the bank is fixed and limited. No substitute liabilities of banks with capital in no way affected. "The liquidity reserve" to be there, but in reality. Banks can raise capital by taking net income to invest. city kitchen Or issue new shares No different from other companies city kitchen in the business. The higher the capital Banks will be able to deposit more. If regulators raise the minimum capital required. The more it costs the bank to make a deposit and debt. "Highly liquid" short out intact. Not that there was less
What's wrong? This myth is based on the simple observation city kitchen that return on capital. (Investor demand) is higher than the return on debt. (The creditors want to), but in reality. Return on equity or debt securities of any kind.