What Is A Loan Loss Provision? A loan loss provision is an amount of money a bank charges to its expenses on its income statement in anticipation that some of the loans it made will default. As a result, loan loss provisions reduce the bank's operating income. In 2020, loan loss provisions have been much in the news as many of the world's banks have announced major loan loss provisions…

What Are Animal Spirits? "Animal spirits" is a term coined by the British economist John Maynard Keynes to describe emotional or "gut" instincts by investors and businesspeople to take risks rather than based on any empirical evidence. Writing in his 1936 classic, "The General Theory of Employment, Interest and Money," during the Great Depression, Keynes described animal spirits as "a spontaneous urge to action rather than inaction, and not as…

A U.S. administration headed by former Vice President Joe Biden is likely to take a different turn from the outgoing President Donald Trump administration when it comes to financial and economic matters. Trump was distinctly more pro-business and market friendly, reversing or rolling back many of the regulations and laws enacted by President Barack Obama. However, Biden is likely to do the same to many of Trump's policies and revert…

The novel coronavirus (COVID-19) pandemic of 2020 proved to be a challenging period for the global economy. Unprecedented regional lockdowns, travel restrictions and mass quarantines prompted a historic downturn. Although some regions were harder hit than others, the common denominator was a rapid spike in unemployment. For heavily afflicted areas, a dramatic uptick in unemployment can have severe consequences. Traditional economic theory suggests that growing unemployment represents a downturn in…

What Is A Junk Bond? Junk bonds are debt securities issued by corporations with poor credit ratings, which means they yield more than investment-grade bonds because of their greater risk of default. Junk bonds are also known as high-yield or non-investment-grade bonds. Junk bonds are generally classified as having credit ratings below Baa by Moody's Investors Services and BBB by S&P Global Ratings and Fitch Ratings, the three main credit…

What Is Yield Spread? The yield spread is the difference in yield between two different bonds. Investors use the yield spread to measure the relative value of two different securities, particularly as it pertains to credit quality but also to liquidity and supply, which can influence bond prices and yields. Yield spread is measured in basis points. Most commonly, yield spread is measured against a benchmark, usually the yield on…

What Is Wirecard? Wirecard is a defunct German payments company that failed in June 2020 following a scandal in which it is accused of defrauding investors by claiming revenue and cash that proved to be nonexistent. Called the "Enron of Germany," the company had once been a high-flying financial technology company that, right up until the time of its collapse, was a member of the DAX 30 index, which tracks…

How has Japan responded to the COVID-19 pandemic that swept across the globe starting in early 2020? Let's explore the Bank of Japan and the government's tactics to help out the economy. Bank Of Japan Japan's central bank, the Bank of Japan (BOJ), has been one of the world's most proactive in monetary accommodation and asset purchases, both governmental and private securities, bonds as well as stocks, since the 2008…

Like so many other countries around the world, South Africa was faced with responding to the COVID-19 pandemic. Here's how both the government and the reserve bank reacted. South African Reserve Bank On 20 March 2020, the South African Reserve Bank, the country's central bank, cut its benchmark repo, or repurchase, rate by 100 basis points to 5.25% from 6.25%. On 15 April it reduced it further by 100 basis…

Following the early 2020 onset of the coronavirus (COVID-19) pandemic, the global population eagerly awaited a vaccine capable of combating the virus. Although developing such products typically takes years, policymakers world-wide committed to rapidly creating a COVID-19 countermeasure. Over the course of the process, the financial markets reacted to approvals, setbacks and expectations posed by a potential coronavirus inoculation. Impact Of COVID-19 On Growth Projections Traditional financial theory tells us…

There are thousands of cryptocurrencies in existence. Unlike publicly listed stocks, these digital assets are traded on a large number of different exchanges, with no exchange having the same collection of cryptos. With so many exchanges and cryptocurrencies out there, it can be difficult for traders to get a sense of what the digital currency market as a whole is doing. Fortunately, traders can leverage indices to better understand key…