Question1.
Banks play a fundamental role in the economic development of an economy- Adam Smith.
(a) Do you think that banks really help in the economic development of an economy?
(b) Analyze the comparative advantages of banks compared to other financial institutions in a modern economy.
Question2.
(i) What do you understand by the terms?
(a) Liquidity risk
(b) Liquidity Gaps
(ii) Assess the benefits of cash matching.
(iii) Analyse the issues for determining the liquidity GAP time profile.
Question3.
(i) Assess in what ways credit risk can migrate to other risks in banking.
(ii) After giving a brief description of the Securitization mechanisms, critically consider the costs and benefits of Securitization.