What Is an Economic Tsunami? An economic tsunami is a widespread set of economic troubles caused by a single significant event. The downstream effects of economic tsunamis generally spread to broad geographic areas, multiple industry sectors, or both. Key Takeaways An economic tsunami is a widespread set of economic troubles caused by a single significant
What Is Economic Value? Economic value is the value that person places on an economic good based on the benefit that they derive from the good. It is often estimated based on the person’s willingness to pay for the good, typically measured in units of currency. The economic value should not be confused with market
What Is the Economic Value of Equity (EVE)? The economic value of equity (EVE) is a cash flow calculation that takes the present value of all asset cash flows and subtracts the present value of all liability cash flows. Unlike earnings at risk and value at risk (VAR), a bank uses the economic value of equity to manage
What Are Economies of Scale? Economies of scale are cost advantages reaped by companies when production becomes efficient. Companies can achieve economies of scale by increasing production and lowering costs. This happens because costs are spread over a larger number of goods. Costs can be both fixed and variable. Key Takeaways Economies of scale are
What Are Economies of Scope? An economy of scope means that the production of one good reduces the cost of producing another related good. Economies of scope occur when producing a wider variety of goods or services in tandem is more cost effective for a firm than producing less of a variety, or producing each
What Is an Economist? An economist is an expert who studies the relationship between a society’s resources and its production or output. Economists study societies ranging from small, local communities to entire nations and even the global economy. The expert opinions and research findings of an economist are used to help shape a wide variety
What Is an Economy? An economy is a complex system of interrelated production, consumption, and exchange activities that ultimately determines how resources are allocated among all the participants. The production, consumption, and distribution of goods and services combine to fulfill the needs of those living and operating within the economy. An economy may represent a
What Is Electronic Check Presentment (ECP)? Electronic check presentment (ECP) is a process that allows financial institutions to exchange digital images of checks instead of paper to increase the speed of the check-cashing process. The signing of the Check Clearing for the 21st Century Act (Check 21) by President Bush on October 28, 2003, permitted
What Is the Earnings Credit Rate (ECR)? The earnings credit rate (ECR) is a daily calculation of interest that a bank pays on customer deposits. The earnings credit rate is often correlated with the U.S. Treasury bill (T-bill) rate. ECRs are rates that banks impute to offset service charges. Because depositors leave balances in non-interest bearing accounts
What Is an Edge Act Corporation? An Edge Act corporation (EAC) is a subsidiary of a U.S. or foreign bank that engages in foreign banking operations; these subsidiaries are named after the 1919 Edge Act, which authorized them. The Edge Act, named after the U.S. senator who sponsored it, was an amendment to the Federal Reserve Act of
