Commercial Bank
What is a Commercial Bank? A commercial bank is a financial intermediary that serves businesses by providing essential liquidity functions within an economy via various products and services. The institution accepts and manages deposits to earn fee income and as a low-cost source of funds. Funds can generate interest income via credit creation and offering...
Bandwagon Effect
What is the Bandwagon Effect? The bandwagon effect is the tendency of people to take certain actions or arrive at a conclusion primarily because other people are doing so. The phenomenon is observed in various fields, such as economics, politics, and psychology. Financial markets are no different. The bandwagon effect works through a self-reinforcing mechanism....
Market Capitalization
What is Market Capitalization? Market Capitalization (Market Cap) is the most recent market value of a company’s outstanding shares. The Market Cap is equal to the current share price multiplied by the number of shares outstanding. The investing community often uses market capitalization value to rank companies and compare their relative sizes in a particular industry...
Systematic Risk
What is Systematic Risk? Systematic risk is that part of the total risk that is caused by factors beyond the control of a specific company or individual. Systematic risk is caused by factors that are external to the organization. All investments or securities are subject to systematic risk and, therefore, it is a non-diversifiable risk....
Systemic Risk
What is Systemic Risk? Systemic risk can be defined as the risk associated with the collapse or failure of a company, industry, financial institution, or an entire economy. It is the risk of a major failure of a financial system, whereby a crisis occurs when providers of capital, i.e., depositors, investors, and capital markets, lose...
