Eco 316 week 3 chapter 16 banking in the international economy

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In this pack of ECO 316 Week 3 Chapter 16 Banking in the
International Economy you will find the answers to the
following questions:
16.1 Multiple Choice Questions
1) Before World War II
2) Before World War II
3) Which of the following is NOT true of the U.S. economy
before World War II?
4) By 2006, international bank lending in the United States,
Western Europe, and Japan amounted to
5) The principal activities of international banking are
6) Which of the following is NOT one of the three leading
financial centers in the world?
7) Which of the following countries has the longest history of
international banking?
8) Participation in international banking by U.S. banks has
9) Which of the following is of greatest importance in
explaining the rapid growth of international banking activities
by Japanese banks during the 1980s?
10) During the 1990s, the share of international bank loans
held by Japanese banks
11) An "offshore market" is
12) Which of the following does NOT represent an important
offshore market?
13) Branches of U.S. banks in which city control the most
assets?

2. 14) Edge Act Corporations are
15) Which of the following may an Edge Act Corporation NOT
do?
16) The activities of a U.S. bank holding company that owns a
controlling interest in a foreign financial services company
are governed by
17) IBFs are
18) Which of the following is NOT a reason that IBFs have
been desirable to banks?
19) What percentage of total U.S. bank assets is held by
foreign banks?
20) Experts studying the lending patterns of Japanese and
other foreign-owned banks in the United States have found
that these banks
21) An agency office of a foreign bank
22) Which of the following is true of an agency office of a
foreign bank?
23) A foreign branch bank
24) The Riegle-Neal Act of 1994
25) A U.S. subsidiary of a foreign bank
26) The International Banking Act of 1978
27) The Foreign Bank Supervision Enhancement Act of 1991
was passed as a result of
28) The Foreign Bank Supervision Enhancement Act of 1991
29) As of 1997, about what percentage of Citicorp's assets
are held abroad?
30) In which of the following countries has the Bank of China
NOT shown significant expansion?
31) Banks are subject to exchange rate risk when
32) The Bank of Credit and Commerce International failed
because of

3. 33) A U.S. bank has ?50 million in deposits and makes a loan
of ?100 million when the exchange rate is $1 = ?1. 5. If the
exchange rate changes to $1 = ?2, then the bank's net worth
will change by
34) A U.S. bank has ?75 million in deposits and makes a loan
of ?90 million when the exchange rate is $1 = ?1. 5. If the
exchange rate changes to $1 = ?1, then the bank's net worth
will change by
35) How can a bank avoid exchange rate risk?
36) What is the approximate daily volume of foreign-exchange
trading?
37) Most of the foreign-exchange trading volume of banks is
with
38) Most of the foreign-exchange trading of banks is carried
out in order to facilitate
39) A currency swap is
40) How may a U.S. bank keep its balance sheet entirely in
U.S. dollars?
41) Why is credit risk in international commerce magnified?
42) A bankers' acceptance is
43) When were U.S. banks authorized to use bankers'
acceptances for short-term financing of their customers'
foreign and domestic trade?
44) The use of bankers' acceptances is most useful in
reducing
45) Which of the following statements concerning the
volume of outstanding bankers' acceptances in the United
States since the 1920s is accurate?
46) Which of the following is true of bankers' acceptances?
47) Before World War II what was the leading global financial
and commercial center?

4. 48) What is the international transaction currency?
49) What was the international transaction currency before
World War II?
50) The Eurodollar arose from
51) Eurodollars are
52) Which of the following was NOT an important factor in
the rise of the Eurodollar market?
53) Eurocurrency deposits are
54) What is the dominant currency in the Euromarkets?
55) Since the late 1980s, the share of eurocurrency deposits
denominated in dollars
56) A key reason the commercial paper market developed
later in Europe than in the United States is that
57) Booking sites are
58) Through the early 1970s the largest borrowers on
Euromarkets were
59) From the mid-1970s to the late 1980s the largest source
of deposits in Euromarkets was
60) Today, the countries with large trade surpluses to deposit
in Eurodollar accounts are
61) The LIBOR is the
62) The typical Eurodollar loan
63) What is the primary motivation for loan syndication in
the Euroloan market?
64) Why did the volume of ly syndicated loans in
Euromarkets decline during the 1970s and 1980s?
65) Eurobonds
66) The effect of evolving financial market regulation has
been to
67) International coordination of minimum capital
requirements for commercial banks began in

5. 68) A key difficulty that banks encounter in lending to foreign
governments is that
69) From 1970 until the early 1980s the creditworthiness of
many developing nations was improving because
70) Currently, U.S. banks pay deposit insurance premiums on
71) Central banks have met to discuss their roles as lender of
last resort several times at the
72) Discussion of the possibility of setting up an international
lender of last resort began following the
73) In which of the following countries was a deposit
insurance fund first established?
74) Recent research has found that deposit insurance
75) The most likely direction of bank regulation
internationally will be to
76) Which of the following is likely to be true as the
international coordination of bank regulation continues?
77) The growth of Islamic banking in recent years has
occurred for all of the following reasons EXCEPT
78) A problem facing Islamic banking is
79) The bulk of financing by Islamic banks involves
80) In the Islamic religion, it is forbidden to
16.2 Essay Questions
1) Why was international banking unimportant for U.S.
banks, savers, and borrowers before World War II? Is it likely
that its importance may ever recede to a low level again?
2) Which countries are the most important centers of
international banking? Why is international banking
concentrated in these countries?
3) What is a Euroloan? What are its typical characteristics?
Why is it very likely to be syndicated?
4) Suppose your bank has made a loan of 50 million euros,

6. but has deposits of only 25 million euros. If the exchange rate
was $1 = 0.75 euro at the time the loan was made, but
subsequently changes to $1 = 0.90 euro, what is the impact
on the net worth of your bank? Suppose the exchange rate
changes to $1 = 0.65 euro?
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