Banks that engage in off-balance-sheet activities may
A、increase profits
B、reduce risk
C、increase risk
D、all of the above
E、both (a) and (b) of the above
A、increase profits
B、reduce risk
C、increase risk
D、all of the above
E、both (a) and (b) of the above
Why should banks need to establish formal operating procedures?
A.The supervisory authorities require them to do so.
B.The shareholders expect a reasonable return on their investment.
C.The banks have to keep safe large volume of monetary items raised from all sources.
D.The banks engage in a large volume and variety of transactions.
A、separated commercial and investment banking.
B、made it illegal for a commercial bank to buy or sell securities on behalf of its customers.
C、made it illegal for investment banks to engage in the underwriting of corporate securities.
D、did all of the above.
E、did only A and B of the above.
increase, engage, capital, protect, failures, fail, interests, efficiently,
expensive, align, protect, insurance, defraud, losses, closes
Bank managers and owners must not be given incentives to【1】in behavior. detrimental to the whole banking system. They must either run their banks【2】or face failure. Deposit insurance is meant to【3】the banking system, not poorly run banks. The fact is that bank【4】are often self-inflicted by owners and managers who mismanage. Such losses can be reduced if the supervisor【5】the bank before it fails totally, since delaying a bank closing or sale tends to increase【6】and to spread them to the banking system as a whole.
Even without deposit insurance, bank managers may pursue their own【7】at the expense of the bank. But the problem gets worse with【8】. Managers may indulge in such excesses as high salaries,【9】buildings, and lavish furnishings. To combat this problem, managers could receive an "incentive-compatible contract" to【10】their interests with those of the owners. When the hank is sound, managers can best【11】their professional reputations by keeping it so. However, if a bank begins to【12】and no proper incentive exists to protect its【13】, managers may join owners in being prepared to gamble for recovery by making high-risk loans or to loot or【14】the bank. At that point deposit insurance could【15】their opportunities to do so.
(1)
Some have argued that such rights are merely luxuries that wealthy societies bestow, but Olson turns that argument around and asserts that such rights are essential to creating wealth. "Incomes are low in most of the countries of the world, in short, because the people in those countries do not have secure individual rights," he says.
Certain simple economic activities, such as food gathering and making handicrafts, rely mostly on individual labor; property is not necessary. But more advanced activities, such as the mass production of goods, require machines and factories and offices. This production is often called capital-intensive, but it is really property-intensive, Olson observes.
"No one would normally engage in capital-intensive production if he or she did not have rights that kept the valuable capital from being taken by bandits, whether roving or stationary," he argues. "There is no private property without government--individuals may have possessions, the way a dog possesses a bone, but there is private property only if the society protects and defends a private right to that possession against other private parties and against the government as well."
Would-be entrepreneurs, no matter how small, also need a government and court system that will make sure people honor their contracts. In fact, the banking systems relied on by developed nations are based on just such an enforceable contract system. "We would not deposit our money in banks ... if we could not rely on the bank having to honor its contract with us, and the bank would not be able to make the profits it needs to stay in business if it could not enforce its loan contracts with borrowers," Olson writes.
Other economists have argued that the poor economies of Third World and communist countries are the result of governments setting both prices find the quantities of goods produced rather than letting a free market determine them. Olson agrees that there is some merit to this point of view, but he argues that government intervention is not enough to explain the poverty of these countries. Rather, the real problem is lack of individual rights that give people incentive to generate wealth. "If a society has clear and secure individual rights, there are strong incentives (刺激,动力) to produce, invest, and engage in mutually advantageous trade., and therefore at least some economic advance," Olson concludes.
Which of the following is true about Olson?
A.He was a fiction writer.
B.He edited the book Power and Prosperity.
C.He taught economics at the University of Maryland.
D.He was against the ownership of private property.
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