Econ 2221.601 - Money & Banking: Project (10% of Total Grade)

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1. Discuss the concepts of economies of scale and economies of scope. Give an example of each that may relate to a commercial bank.

2. Both Bob and Peter submitted their loan applications to NOLA Bank for $50K each. Bob is a less risky borrower than Peter. Would the bank be able to earn the average expected return if it decides to charge an average interest rate for both? Identify whether it is an example of a moral hazard or adverse selection problem and then explain the concepts.

3. Do you think that GE Finance Inc. faces more regulation than Chase Bank? Explain why? What are the major performance advantages and disadvantages of GE Finance Inc. compared to Chase?

4. NOLA bank heavily relies on its guarantee business. Discuss the accounting treatment of bank guarantee on its balance sheet. When does a firm need a bank guarantee? Discuss the pros and cons of bank guarantee for NOLA during the episodes of high economic uncertainty such as COVID-19.

5. What is Agency problem? Give an example of an agency problem related to bank lending. As a senior loan manager of NOLA bank what steps you can take to reduce agency costs for the depositors?

6. What monetary actions Federal Reserve Bank should take to boost the economy from COVID-19 crisis. Explain with relevant examples.

7. Mr. Toddler needs $10 million initial capital for manufacturing Hand-sanitizer. The recent crisis of Hand-sanitizer has motivated Mr. Toddler to produce it locally.List the possible funding sources and discuss the advantages and disadvantages of each source. Finally, recommend the most appropriate funding source for Mr. Toddler?

8. Evaluate the evidence and theoretical justifications on the impacts (or non-impacts) of financialization affecting asset price characteristics. And related - Should financialization and be limited for market liquidity volatility and overall health of assets markets?

9. Is cryptocurrency a speculative investment rather than a conventional currency? Given its nature what are the pros and cons of including cryptocurrency or its derivatives as part of investors' asset allocations?

10. Do you think that because of COVID -19, an economic recession is inevitable? Justify your argument with adequate evidence. What would be your policy prescription to protect small businesses in the U.S from COVID-19.