Aditya Takke’s Post

Day 35 Word of the day- BALANCE OF PAYMENT *Key Takeaways* The balance of payments includes both the current account and capital account. The current account includes a nation's net trade in goods and services, its net earnings on cross-border investments, and its net transfer payments. The capital account consists of a nation's transactions in financial instruments and central bank reserves. The sum of all transactions recorded in the balance of payments should be zero; however, exchange rate fluctuations and differences in accounting practices may hinder this in practice.

13 truths I'll never forget about Know about Repo Rate + Margin = Rate of Interest Rate: 1. Understanding the Repo Rate is crucial for monetary policy decisions. 2. The Margin is the additional interest added by financial institutions. 3. Rate of Interest Rate is the final cost of borrowing money. 4. Repo Rate influences the overall economy, impacting borrowing and spending. 5. Changes in Margin can affect the total interest payable on a loan. 6. Monitoring Rate of Interest Rate fluctuations is essential for financial planning. 7. The Repo Rate + Margin formula determines the final Rate of Interest Rate. 8. Knowledge of these components helps in making informed financial decisions. 9. Ignoring these factors can lead to financial pitfalls and higher costs. 10. Keeping track of economic indicators can give insights into Rate of Interest Rate changes. 11. Knowing how to calculate the final Rate of Interest Rate is key for borrowers. 12. Stay informed about current Repo Rates and Margin adjustments in the market. 13. Mastering these concepts can help in managing personal finances effectively. Who agrees? #FinancialLiteracy #RepoRate #InterestRates

Banks are the pillars of any economy, providing the backbone for financial stability. Still, many people find it challenging to analyze banks because financial ratios and metrics can seem complex. Swipe through the post to get started on your journey to better understand and analyze banks. #Banking #FinancialRatios #BankAnalysis #FinancialHealth #FinanceSimplified #BankingInsights #BankingSector #FinancialLiteracy #Economy #CASA #NPA #research #InterestRate #financialmodelling #valuation #Investing #StockMarket #FinancialEducation #PersonalFinance #FinancialLiteracy #GrowthInvesting #CFA #FRM #Economy Which ratio do you believe is the most important for analyzing banks? Share your insights in the comments below!

In the latest Quarterly Credit update from BC Partners’, Mike Terwilliger, CFA and Ted Goldthorpe take a look back at the first quarter of 2024 and explore the outlook for private credit for the year ahead. The report covers: 🔘 Why the team views a ‘soft-landing’ in the U.S. as anything but certain 🔘 The impact of continued muted bank lending, and what this means for the economy 🔘 The expected path for U.S. interest rates in an election year 🔘 The positive signs in the current environment - including plentiful jobs and the potential of artificial intelligence 🔘 And how this all translates into challenges – and opportunities – from an investor standpoint Click here to read more: https://lnkd.in/eeMYjTqd

How many of you analyze financial statements of the banks and check the fundamental strength of the banks before investing in a Fixed Deposit with the bank? How many of you invest without checking the financials of the bank, just looking at the popularity of the bank, or the bank with higher interest rates? And also, how many of you are aware that a fundamentally strong bank with high credit ratings offers low interest rates on Fixed Deposits. On the contrary, a bank with weak fundamentals and higher risk of default, offers higher interest rates? #Fixed #Deposit #Financial #Statement #Analysis #MarketMarvels

The Basel Committee is reviewing liquidity ratios, which help banks manage cash flow during financial stress. They’re looking at: 1. What counts as liquid assets ? Ensuring that the assets considered liquid are truly capable of being converted into cash in a stress scenario. 2. How much cash banks need in a crisis. Revising the assumptions about run-off rates in stress scenarios to better reflect actual risks. 3. When banks should meet these requirements.  Considering the phase-in of standards to allow banks adequate time to adjust to new requirements. This review could lead to changes in how banks prepare for financial challenges. #Banking #Finance #Regulation

Read how European banks show resilience with strong Q3 results, with 15% growth in fee income across investment banking and wealth management, reflecting US trends. Despite slower net interest income, banks anticipate growth through disciplined cost control. #Banking #Finance #Investment https://ey.smh.re/3eYB

An important lesson I try to teach my teenage daughter is the concept of “Money”. Why - I ask her - is she so certain that a piece of paper commands so much power and gives her confidence that the guy across the counter will accept it when she wants to buy a earring, an espresso or an experience? It is impossible to understand Money without understanding 3 words – Solvency, Liquidity and Central Banking. In March, among the euphoria and din of hotter than expected inflation prints, weaker than expected retail sales, higher than expected jobs, spiking bond yields, collapsing credit spreads, weakening EV sales, rising DXY and plunging currencies, resurging manufacturing, etc, there were 3 events that almost went unnoticed by the average retail investor and the broader student of money. ECB's New Operational Framework https://lnkd.in/gJP3HnPH RBAs New Operational Framework https://lnkd.in/gfaSDFa6 A Bloomberg article “Xi Cryptic Bond Comments Hint at PBOC Becoming More Like Fed" https://lnkd.in/gPZS49Fq This note does not explain monetary policy implementation of these Central Banks. Indeed it would be impossible to explain with a 3000 character constraint. However, the key point is this. In the good old days, prior to a bunch of bankers deciding to pile on obscene leverage and bet deposits into an array of risky real estate and low grade corporate debt, the wheels of our financing system were oiled by liquidity provided by CBs on a “need” or “demand” basis. This was a “Scarce Reserves or a Corridor System”. The GFC, by choice or by force, made CBs pour enormous liquidity into the system. This was an “Ample Reserves” system. While arguably this achieved the more economic growth, higher benign inflation and financial stability, it also resulted in bloated CB balance sheets and a dull third party funding market. A reality despised by most Central Bankers. Pandemic fuelled inflation and fiscal magnanimity has given Central Bankers the opportunity to correct this flaw and reduce their foot print. Yet, at the same time the scars of Sep 19 Repo Tantrum, which essentially resulted from an underestimation of the liquidity required in the system, are still fresh in memory. The ECB and the RBA’s new system basically says – we will keep the system flush with liquidity. But, you Mr Dealer & Mr Banker, need to come and ask me for liquidity and I promise to provide all the liquidity you need (full allotment auctions). At the other end of the spectrum, an Old Xi Jinping speech created flutter in markets causing speculation China might commence QE as it tries to cure malaise that has gripped its economy over the past 2 yrs. Tighter liquidity in USD, EUR $ AUD, gradual but prolonged rate hikes in JPY and potential QE in China – You do the math ! www.thecreditbalance.com

Sure, here is the translated text: Banks create money only if they can arbitrate with collateral. Perry Mehrling: So, there is this transmission mechanism from the overnight interest rate to the term interest rate and, in this case, to asset prices. Is that right? Eh, this is what the Federal Reserve does. This is the consequence of the dealer's activity. And this is the consequence of the dealers' activity. The Federal Reserve does not set these prices, they are responses. Because this agent is experiencing that when the federal funds rate goes up, their spread, the spread between the term rate and the federal funds rate, reduces. Therefore, the profitability of their business decreases. So, they say, I am not going to do much more business, or I am only willing to expand my balance sheet further if I get a better rate, if I get a better term rate, so that is the transmission mechanism and, similarly, here, these short-term effects are transmitted.