Banking and the Management of Financial Institutions - Liabilities: source of funds

5 important questions on Banking and the Management of Financial Institutions - Liabilities: source of funds

What are checkable deposits?

Bank account that allows the owner to write checks to third parties

What are the non-transaction deposits?

Primary source of bank funds: owners cannot
write checks on it, but interest rates are higher

What is the third source of funds?

Borrowings from other banks on the interbank market (Discount loans)
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What's the forth source of funds? (equity)

Bank capital : bank’s net worth: total assets – liabilities

How do you raise capital?

Raised by selling new equity or from retaining earnings. (Cushion against a drop in the value of the bank’s assets)

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