Siobhan Townsend Summer of 2015 Comstock Period 3

Economics Summer Assignment

“Is a banking revolution coming to India?” (Aug. 20, 2015)

India’s Reserve Bank has recently put a notice on the state backed financial institutions that

they had given the “okay” to launch payment banks. These banks can accept large deposits,

they cannot grant loans or credit cards, and lastly they are required to invest their deposits in

government bonds. These specific banks have licensed by telecom companies, postal services

and top conglomerates. India’s residents do not have great access to formal banks so the

government is promoting the use of mobile banking which has started to expand In Africa. The

new forms of payments and banks should help jumpstart the market and new partnerships, as

well as ensure that more money will come into the system. [1]

New concepts that were presented in this article were payment banks, conglomerates

and financial inclusion. Payment banks are banks that are tailored to small business and low

income households. They can hold only hold a certain amount of money and involve no credit

risk. Also they cannot give out loans but, have SLR securities which are safer investments and

they can be easily recovered [1]. They face a near zero rate of default and need little capital

emergency backup if they fail. Next, conglomerates, a conglomerate is a corporation that made

up of many small, unrelated businesses. One company has control of the smaller ones but

subsidiary business runs on its own terms [3]. Lastly a financial inclusion is the availability of

affordable financial services and products to those who do not have them readily available to

them, such as 65% of India adults who payments options would help [2].

Sources:

[1] http://money.cnn.com/2015/08/20/news/economy/india-banking-modi/index.html

[2] http://www.banking.org.za/what-we-do/overview/working-definition-of-financial-inclusion

[3] http://www.investopedia.com/terms/c/conglomerate.asp

Siobhan Townsend Summer of 2015 Comstock Period 3

Economics Summer Assignment

“Still Standing: Storms fail to knock down U.S. stocks” (Aug. 15, 2015)

Stocks have been all over the pace these past years. Oil is now at the lowest it’s been in

the past six and half years. Right alongside with metals like copper. The strong U.S dollar is

down quite yet though. Even though the S&P 500 is only up by 1.5% they’re still doing okay.

Even though the rest of the world markets may be all over the place ours is making up for our

own shifts. Also with earnings growth being nonexistent, the dollar being too strong, China

being a mess oil and metal prices plummeting and consumer spending being all over the place

we are still in a better economic position than most [1].

New concepts and terms found in this article were the Federal Reserve,

devaluation of currency, bull market, and bear market. The Federal Reserve is the central

banking system of the United States [2]. Next we have devaluation of currency is a downward

adjustment of the value of a country’s currency in relation to another’s which is what happened

to China’s currency because of the strong U.S dollar [3]. Also, there is the bull market and bear

market. The bull market is a market where share prices are rising encouraging buying of shares.

The bear market is when share prices are dropping encouraging selling. We are currently in a

bull market and that’s the way the U.S. wants it to stay [4].

Sources:

[1] http://money.cnn.com/2015/08/15/investing/stocks-markets-lookahead/index.html

[2] http://www.investopedia.com/university/thefed/fed1.asp

[3] http://www.investopedia.com/terms/d/devaluation.asp

[4] http://www.investopedia.com/terms/b/bearmarket.asp