Ini merupakan nota saya yang saya olahkan kembali selepas saya belajar selama satu semester ini.
Semoga bermanfaat.
Chapter 4 : Money Banking and Financial Institution
Definition of Money:
Anything
that generally accepted as a medium of exchange and repayment of debt in a
given country.
Function of Money :
1. Medium of money
To
avoid the inefficiencies of butter system such as double co-incidence
2. Store of value
Enable
people to buy and sells goods at different time and different place
3. Measure of value
As
a standard numerical unit of measurement the market value
4. Standard of
deferred payment
An
accepted way to settle a debt
*
The explanation you can make it by your own anyway, but still needs to related
with the actual one.
Types of money :
1. Commodity money
2. Demand deposit
or current deposit
3. Fiat money
4. Token money
Money Supply :
Total
amount of money to used in making of transactions.
Groups of Money Supply
1. M1 =
The
question can ask
1.
How many the paper/token money?
2.
How many the total M1?
> fiat money
- paper money and token money
>
demand deposits or current deposit by commercial banks
>
traveler's cheques
2. M2 = M1 + NEAR MONEY
Near
money are
>
savings and fixed deposits with the commercial banks
>
savings and fixed deposits with Islamic Bank
>
negotiable certificates of deposits(NCDs) issued by commercial banks
>
Repos by commercial banks
>
BNM certificates
>
Treasury bills
3. M3 = M2 + BROAD NEAR MONEY
Broad
near money are
>
savings and fixed deposits with other financial inst. and non bank ( finance
companies, merchant banks, BSN, ASB, ASN AND LUTH )
>NCDs
by other financial inst.
>
Repos by other financial inst.
*
Important
Fiat
money = Paper money + token money
Near
money or Quasi money or Narrow quasi money = M2-M1
Broad
near money or broad money or broad quasi money = M3-M1
Motives of Holding Money :
1. Transactionary Motive ( Mt )
- people hold money to buy goods
and services
- depends on disposable income (
Yd)
- when Yd increase, Mt increase,
and vice versa
2. Precautionary Motive ( Mp)
- reason to hold money for
uncertainties purpose
- depends on Yd
- When Yd increase, Mp also increase
3. Speculative Money ( Msp)
- people hold bond and share
instead of money
- negative relationship
Credit creation ;
1. Cash reserve = cash ratio x
initial deposits( given in question )
2. Excess reserve/loans = Initial
deposits - cash reserve
3. Cash ratio = cash
reserve/initial deposits x100
4. Money multiplier = 1/cash ratio
TOTAL CREDIT CREATED ( TCC )
TCC = 1/cash ratio x initial loans
TOTAL MONEY SUPPLY ( TMS )
TMS = 1/cash ratio x initial
deposits @ TCC + initial deposits
Limitation to Credit Creation ;
1.
The cash ratio
-
has negative relationship with total credit creation
-
when cash ratio increase it can reduce the total credit creation and vice
versa.
2.
The amount of deposits
-
Total credit creation is depends on the amount of deposits in the bank.
-
the bank will increase CC if the amount of deposit is large and vice verca.
3.
Customer demand
-
also depends on borrowers.
