- Based on the information provided below about banks A and B, compute for each bank its return on assets
(ROA), return on equity (ROE) and leverage ratio.
a. Bank A has net profit after taxes of $1.8 million and the balance sheet below:
Reserves $5 Deposits $100
Loans $70 Borrowing $10
Securities $45 Bank Capital $10
b. Bank B has net profit after taxes of $0.9 million and the balance sheet below:
Reserves $7.5 Deposits $75.0
Loans $55.0 Borrowing $3.0
Securities $23.5 Bank Capital $8.0
- Explain how a bank uses liability management to respond to a deposit outflow. Why do banks prefer liability
management to asset management?
- Are U.S. banks increasing in size? Use FRED to plot since 1984 on a quarterly basis the number of U.S.
commercial banks (FRED code: USNUM) and, on the right scale, the volume of their deposits (FRED code:
DPSACBM027SBOG). Download the data and compute the average deposit size of banks in the first quarters
of 1984 and 2016.
- What share of U.S. banks fail? Plot since 2000 the fraction (in percent) of bank failures (FRED code:
BKFTTLA641N) relative to the number of banks (FRED code: USNUM). Comment on the timing and the
proportion of failures. Were most of the failing banks large or small?
proved. (Mill 2006: 259) His justification for colonialism in “Considerations” is therefore a great contradiction to his commitment to individual liberty. This suggests that his view that colonialism led to more individual liberty for the people was an idea rather than a definitive policy. (Isak 2007: 359-400). Mill’s justification that colonialism will nurture the people to adopt the principle of individual liberty also contradicts all his arguments for non-intervention in the case of a civilised nation; that liberty must be gained through an arduous struggle and that aid by a foreign power to obtain liberty has negative long term affects. Firstly, it could be argued that if an arduous struggle is the only way people can gain liberty, then how are the British going to artificially prepare the people for liberty? Secondly, there were examples of arduous struggles against British rule in India and yet Mill still supported British control over these people. For example, the Sepoy Mutiny in India in 1857-59 involved the majority of the population. (Ryan 2014: 1-14) To add to this great contradiction, the same year (1859) as the mutiny Mill even wrote in “A Few Words on Non-Intervention” about how people must be given self-rule if they fight for it. (Mill 2006: 262) Although Mill may argue that these “barbarians” are not yet civilised enough to know that they want this freedom, Hamburger questions how Mill is to judge who is ready to decide their own governance through individual liberty? (Hamburger 1999 in Tunick 2006: 601). A further contradiction is Mill’s belief that it is unfair for a foreign power to prevent the people from overthrowing it and he even believes foreign oppression would warrant an invasion from another foreign power to correct the imbalance and create a fair struggle. (Mill 2006: 262) Tunick has tried to argue that there was greater corruption in India prior to British rule hence at least the British gave the people a chance of gaining liberty which they would not have had. (Tunick 2006: 601) However, this argument actually contradicts Mills belief that foreign intervention in this situation was unhealthy, as the State could easily become reliant on foreign support and this could lead to another civil war or oppressive government when the foreign power leaves. Hence, if foreign control could lead to this situation, this clearly would not give the people more liberty and this undermines Mills argument that the local people of India will one day have been pedagogically coerced enough to be able to take over from British rule. Furthermore, through imposing British ideas of individual liberty on these “uncivilised” communities he is being narrow minded in assuming he knows what is best for these countries and is in fact taking away the liberty of these people to decide how they interact. This is because his arguments are based on a fundamental misunderstanding of the culture of Asia and Africa, which put a greater emphasis on social obligation. (Doyle 2009: 365) What’s more, through Mill’s assumption that he can educate the Indians to want self-rule and individual liberty he is contradicting his own idea that the demand for change must come from within the country. Based on this argument surely the colonisers should have suggested the idea of individual liberty, instead of imposing it, so that the people were more likely to fight to maintain this liberty as they had chosen it themselves. Mill’s response to this would be that they are not yet capable of deciding this for themselves, but it could equally be argued that slaves can only learn to be free when they are given freedom. >GET ANSWER