The use of commercial paper by commercial banks to raise short-term funds is restricted
in the United States to large money-center banks. Therefore, when you analyze
the banking system as a whole you get an incomplete picture of how important commercial
paper is for individual U.S. banks.
a. Visit the S&P Market Insight database at mhhe.com/edumarketinsight
and locate the annual balance sheet for a large commercial bank (such as Bank
One [ONE]). Check under "Excel Analytics."
b. Using data for the last five years, compute the ratio of "Commercial
Paper" to "Short-Term Borrowings-Total." Does commercial paper
represent a very significant source of borrowed funds for this bank? Has this
figure varied much over the five-year period?
c. Compute the ratio of "Commercial Paper" to "Liabilities-Total."
Does commercial paper represent a very significant source of short-term funds
for this bank overall (i.e., when you consider all of the bank's liabilities-its
deposits and other borrowings)?
d. Compute the ratio of "Short-Term Borrowings" to "Liabilities-Total."
Has this ratio varied much over the past five years for this bank? (Note that
while short-term borrowings are not the major source of funds for most banks,
they are quite important in day-to-day bank operations, as you will see in the
next several chapters.)
