This revised and updated edition of The Economics of Banking addresses the need for a user-friendly textbook that is mathematically accessible and provides a microeconomic context, which enables students to understand and analyse contemporary trends and operations in banking. Providing a sound theoretical basis for understanding bank behaviour, The Economics of Banking is essential for final year undergraduate and postgraduate students taking courses in banking. FEATURES OF THE NEW EDITION * Greater emphasis is provided on risk management with an extended chapter dealing with trading risk and recent developments in bank book risk management. * A new chapter has been added on assessing bank competition and the competitive nature of the banking market. * New material has been added on bank performance including: benchmarking, efficiency analysis and modelling of bank cost functions. * Coverage of bank and financial regulation has been significantly updated with more extensive discussion of Basel 2 and operational risk. * More rigour has been added to the chapter on international banking and more discussion about the future of retail banking is included in the introductory chapter. * New material has been added in selected chapters examining the global credit crunch of 2007/8 and the Northern Rock bank crisis in the UK.