1. Some central banks do not pay interest on required reserves. Some bankers see this as a tax on their business. Can you explain why?

2. All commercial banks within a country hold a proportion of their total deposits with the central bank (for example, the Federal Reserve in the United States).Why do commercial banks hold such reserves even though they usually earn a low interest rate?

3. Suppose you are a bank manager and are responsible for liquidity management and reserves. The central bank decides not to pay interest on excess reserves, which you may be holding there. You decide to hold only the required reserves with the central bank. If deposit outflows occur and you do not have sufficient reserves, would you borrow from other banks, sell loan portfolio, or sell some securities? What costs would you bear as a result of your decision?

4. What is the role of overnight loan market in sustaining the growth of an economy?

5. Describe the relationship between interest rates and investment decisions. 6. Why do banks need to hold capital? Are there any costs associated with holding a large amount of capital?

7. Analyze the term "liability management" in the context of retail banking.

8. The source of bank operating income has changed over the years. Discuss.

9. Which components of operating expenses experience the greatest fluctuations? Why?

10. What is equity multiplier? When are bank shareholders better off in terms of this coefficient?

11. What is the importance of a bank's net interest margin?

12. How can banks benefit from off-balance operations? Is this activity associated with bank risk profile?

13. What is the logic behind provision for loan losses? Is this the same as a loan write-off? Can the provision of bad loans be the source of large expenses for banks?

14. How is Net Interest Margin (NIM) a good measure for bank performance? Bank management performance?

15. ROA and ROE are considered as the performance evaluation tools for banks. Do they always move in the same direction? How does an increase in capital affect them?