Index 745 desired reserves, 317 international reserves, 518 nonborrowed reserves (NBR), 439 required reserves, 407 role of, 322 325 secondary reserves, 317 residual claimant, 20, 141 restrictions on asset holdings, 229 230 branching restrictions, 255, 271 273 on competition, 235 on entry, 39 restrictive covenants, 169, 181 182, 331 332 restrictive provisions in insurance policies, 294 return See rate of return return on assets (ROA), 327 return on equity (ROE), 327 revaluation, 527 reverse causation, 641 reverse repos, 443, 444 445 Ricardian equivalence, 679 Ricardo, David, 679 risk see also financial derivatives and asset demand, 83 84 credit risk, 322 default risk, 114 116, 348 defined, 32, 83 demand for bonds, shifts in, 91 foreign exchange risk, 357 358 interest-rate risk, 74 75, 74n, 75n, 258 259, 322 limit on risk taking, 250 reinvestment risk, 75n standard deviations of returns that measure risk, 83n stock market risk, 358 systemic risk, 432 risk-averse person, 84 risk-based insurance premiums, 245, 294 risk lover, 84 risk management assessment of, 233 234 financial futures, 349 357 forward contracts, 347 348 hedging, 346 347 options, 361 370 stock index futures, 358 361 swaps, 370 373 techniques, 341 risk of default See default risk risk preferrer, 84 risk premium, 114 risk sharing, 32 risk structure of interest rates, 113 119 default risk, 114 116 defined, 113 income tax considerations, 117 118 liquidity of bonds, 117 118 risky assets, 229 230 Robertson, John C., 109n Romania, high inflation in, Romer, Christina, 650n Romer, David, 650n Royal Bank of Canada, 261 Royal Trust, 297 rule of law, 227 Rush, Mark, 710n Russia financial crisis in, 218n financial repression, 184 fiscal imbalances, 199, 215 high inflation, sovereign wealth funds, 304 S safety net, 200, 226 229 safety/returns trade-off, 328 Sale and Repurchase Agreements (SRAs), 411, 443, 444 445 sale of information, 173 sales finance companies, 23, 299 Salomon Smith Barney, 273 Sarbanes-Oxley Act, 28, 189 190, 193 Sargent, Thomas, 691, 696n, 707n, 709n, 710n savings accounts, 316 Savings and Credit Union Act (Qu bec), 238t Schedule I banks, 268 269 Schedule II banks, 268 269, 280 Schedule III banks, 268 269, 280 Schoenholtz, Kermit L., 131n Scholes, Myron, 306 Schwartz, Anna, 425, 643, 643n, 645n, 649 screening, 293 294, 330 331 Sears Roebuck Acceptance Corporation, 299 seasoned issues, 300 secondary loan participation, 340 secondary market, 20 21 secondary reserves, 317 secured debt, 169 securities banks holdings of, 317 318 brokers, 20 dealers, 20 defined, as external financing source, 168 flow of funds through financial system, 18, 18f government agency securities, 27 investment bank, investment-grade securities, 115 116 regulation of securities trading, 301 underwriting, securities brokers, 300 securities dealers, 300 securities market operations, 300 302 securitization, 204, 263 Security First Network Bank, 261 segmented markets theory, 126 127 seigniorage, 256, 546 self-correcting mechanisms, 630 Selody, Jack, 455n separation of banking and other financial services industries, 274 275 Serletis, Apostolos, 54n, 400, 569n, 681 service transactions, 523 settlement balances, 316, 406, 437 439 settlement balances management, 445 452 settlement balances target level, 448 449 settlement price, 356 shadow banking system, 258 268 shareholders, 141 Shefrin, Hersh, 159n Shiller, Robert J., 131n, 159n, 160n Shleifer, Andrei, 159n, 185n shocks adverse shocks, 549 aggregate demand shocks, 630 631 demand shocks, 622 negative supply shocks, 634 635 oil price shocks, 279 perfect storm of adverse shocks, 549, 635 supply shocks, 626, 634 635, 671 672, 691n short in a call, 362 short in a put, 364 short position, 346, 351 short-run aggregate supply curve, 624 626, 670n short-run equilibrium, 627 628 short sales, 160 short-term debt instruments, 20 shorter-term bonds, 74 silver crash, 356 simple deposit multiplier, 418 simple interest rate, 59 simple loan, 59, 62, 63 64 simple present value, 61 simple-sum money aggregates, 569n Slovakia, 395 Slovenia, 395 smart card, 49 smart money, 154, 159 social contagion, 160 social security, 297 299 Soci t G n rale, 342 South Korea bailout plans, 211 chaebols, 219 220 currency, collapse of, 221 financial crises, 219 220 sovereign loans, 279 sovereign wealth funds, 303, 304 Soviet Union, 186 see also Russia S&P/TSX Composite, 4, 140 Spain bailout package, 211 inflation targeting, 467 special drawing rights (SDRs), 530 special Purchase and Resale Agreements (special PRAs or SPRAs), 411, 443 444