Video

  • 6 minutes

How Is LIBOR Used?

 

How do banks do business?

The theory of bank finance starts with the old story of borrowing from Peter to make a loan to Paul. The want that banks make money is from the cost of funds plus the margins on the loans. LIBOR is proxy for cost of funds. This video reviews LIBOR as a benchmark for cost of funds and discusses why it is a valid benchmark.

Runtime: 6 minutes