Money & Banking

Section II (30%) Question 1 (15%) The principal - agent is one of the agency problems adversely affecting the banking activity. In the case of shareholder (principal) - manager (agent) problem, the fear is that managers will pursue their interests rather than those of the owners (shareholders) of the bank. How is this agency problem dealt with by the Law on Banks? Fully argue. Section III (26%) Question (26%) Pursuant to the Law, how should BoA fulfill the duty of accountability to the People's Assembly of the Republic of Albania Why should BoA be accountable to the People's Assembly of the Republic of Albania? Fully argue. Question 2 (15%) The paid-up capital is ALL 750 million, the general reserve fund is ALL 3050 million, the calculated net profit is ALL 2000 million and the value of government securities issued to the Bank of Albania (pursuant to Article 7 of the Law on BoA) is ALL 500 million. The assets of the Bank of Albania are not less the sum of its liabilities and paid-up capital. What is the amount that shall be paid to the State Budget? Fully argue and show your calculations