Banking Game
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Banking GameA bank is a financial system and they trade money.They have different units like surplus unit and deficit unit. A real investment is money invested in tangible and productive assets such as plant and machinery, as opposed to investment in securities or other financial instruments.Savings – real investment = positive it is surplus and negative result is a deficit.Income – consumption = SavingsIndirect Channel = they need the bank in order to get out of debt or something.Direct Channel = they don’t need a bank for their transactions, for example for the U.S. government to sell their bonds.Interbank interest rates per round:Round 1 = 3.6%Round 2 = 3.8%Round 3 = 4.4%Notes round 1:Our strategy from round 1 to round 2 was trying to make more profit, because the profitability was quite low compared to the others but our market share was good. We increased the interest rate on loans and decrease the deposits. We also bought a lot of securities because we had too much cash and we could get benefits by spending this money on securities.Notes Round 2:Our profit increased, but our market share decreased around 2%. Now, we should try to increase our market share again. But also try to focus on the increase of the interbank interest rate. We should buy securities otherwise we would have cash exceeding again. So we’ll invest this money. We’ll adjust the interest rates on deposits and loans again because of the 4.4% interbank interest rate. We decided to focus on new branches as well.

Notes round 3:We decided to buy more branches because of the amortization and later on it will be more expensive. We forgot to adjust the commissions and we will do it this round.  And the certificates of bonds, but the results were quite good? We’ll adjust this now and focus on the loans, make them higher and commissions were increased considerably now. Notes Round 4Our profitability and market share are stable, but Bank 5 is jumping so we try to look at their performance and also of the other banks and to increase our market share and our profitability again. We lowered the interest rates of the loans with 0.2% because compared to the average we had high interest rates and that for the same as demand deposits. We again invested in the 12-month securities. Furthermore, we tried to focus decrease our loss on loans so we increased the provisions to 3%. Notes Round 5The results of round 4 were not good compared to our competitors. We decreased in market share and profitability, so we have to find another option. We decided to fire some employees we don’t need. 1 manager, 2 private bankers and 20 cashiers because they are not necessary. It’s crisis so we lowered the interest rates of loans and demand deposits again. Furthermore, we decided to higher the advertisement because we had a higher market share in round 1 and our advertisement regarding to loans and demand deposits.

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Gamea Bank And Bonds.Interbank Interest Rates. (July 3, 2021). Retrieved from https://www.freeessays.education/gamea-bank-and-bonds-interbank-interest-rates-essay/