ZeeK the Geek
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probanker_help1.pptxIn your internet browser input www.probanker.com
Note: You must register using the instructions available on Blackboard before following the instructions in this presentation.
Click on drop down box for Courses
Click on “Log in” box
Click on UMKC course in the middle of the list
Logon Screen
Use logon information in the letter, click on “Sign in” when done
To create a game to play, you click on “New Games”
As a student you can only create an Autobank – a bank where you play against the computer. In a competitive game – a bank where you play against other banks in the class -- only the instructor can create.
Use the Assignments Regional Bank Template. Name your new game. Click on “Create game.”
This screen appears. It tells you ProBanker created your Autobank.
When playing an Autobank game, you click on Manage Autobanks. When we play the competitive game, you will click on “Manage Competitive.”
When you click on Manage Autobanks, a drop down list of your autobanks will appear. Click on the one you want to play.
You can create as many autobanks as you want. These banks let you experiment with games inputs to see their effect on the banks’ performance.
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The autobank you selected will appear. Click on “Play this bank.”
The decision input/report page will appear. Click “Decision” tab to input your management decisions for the game. Click the “Reports” tab to review a wide variety of financial reports for your bank
There are four sets of inputs
Quantity Inputs
Input current qtr $ amounts here
Range of valid inputs
Previous qtr inputs
Remember to save your input
Dollar inputs are in $000s. For example, $15,000 is $15 million.
Loan and Deposit Rate Input
Some help on rates – lower loan rates to attract loan business. Raise them to discourage loan business
Raise rates to bring deposit to the banks. Lower them to cause deposits to leave the bank.
Small rate changes can have dramatic effects. No change is still a change because market rates change.
Elasticity: A measure of responsiveness
Elasticity tells you how sensitive loan and deposit customers are to interest rate changes, all else equal.
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E d > 1 Elastic, % change in quantity is greater than % change in price,
E d =1 Unitary, %change in quantity and price are equal
E d < 1 Inelastic, % change in quantity is less than % change in price
E d = 0 Perfectly inelastic, no change quantity in response to change in price
Ed= Perfectly elastic, infinite % change in quantity in response to no price change
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E d > 1 Elastic, % change in quantity is greater than % change in price;
increase interest rates loan volume falls and loan interest income declines
decrease interest rates loan volume rises and loan interest income rises
E d < 1 Inelastic, % change in quantity is less than % change in price
increase interest rates loan volume falls and loan interest income increases
decrease interest rates loan volume rise and loan interest income decline
An Example
Elastic
Quarter 1
Corporate loans = $2,500 interest rate = 5% revenue=$125
Quarter 2
Corporate loans = $2,000 interest rate = 6% revenue=$120
% Change in quantity = -500/(2500+2000)/2=-.222222
% Change in price= 1/(5+6)/2=.181818
E=.22222/.181818= 1.2222
Rise in interest rates caused interest income to fall because the reduction in quantity of loans offset the interest rate rise
Fall in interest rates caused interest income to rise because the increase in the quantity of loans offset the interest rate fall.
Quarter 1
Corporate loans = $2,500 interest rate = 5% revenue=$115
Quarter 2
Corporate loans = $2,300 interest rate = 6% revenue=$138
Another Example
Inelastic
% Change in quantity =-200/(2500+2300)/2=-.08333
% Change in price= 1/(5+6)/2=.181818
E=.083333/.181818= .458334
Rise in interest rates caused interest income to rise because the interest rate rise more than offset the fall in quantity of loans
Fall in interest rates caused interest income to fall because the increase in loans was not large enough to offset the decline in the loan interest rate.
Advertising Decisions
There is a trade-off between advertising and interest rates. For example, increases in advertising can offset, to some small extent, an increase in loan interest rates. Remember elasticity is important here.
Other Miscellaneous Decisions
Affects fee income
Affects loan quality
Can issue or retire stock
Remember to save your decisions
Once inputs are entered, you can run the game for the next quarter -- “Simulate next period.”
This tells you have entered and saved decisions
Once the simulation for the next quarter is complete. Click on the “Reports” tab.
Summary balance sheet comes up first. You can call up other reports by clicking on “report” drop down box
You can download financial reports to Excel. Download a CSV file to Excel. Copy the contents of this spreadsheet (Cells 1 through H532) to the Reports Tab into Game Helper Autobank for Students spreadsheet file.
Manuals for the game can be found here
Some hints
Try to maximize the difference between interest income and interest expense.
Know the cost of funds, lowest cost funds will be retail demand deposits and passbook savings. The highest cost funds will be borrowing from the Federal Reserve, Discount Window borrowings. Avoid these borrowing if possible.
Remember capital is a funding source. Issue capital to retire high cost borrowings. Remember to stop issuing stock.
Some loans tend to have higher default rates, e.g., installment loans.
Watch noninterest expenses, judge whether they are too high or low.
READ THE QUICK START MANUAL
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