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UNIT 5
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ASSETS AND LIABILITIES OF
BANKS
DISCUSSION 1. How do banks make their money?
2. What is the current situation in the sphere of banking in Ukraine?
3. What do you think about the problem of bankruptcy of banks in Ukraine?
reading THE BANK'S ASSETS AND LIABILITIES
To understand how a bank operates, first we need to examine its balance sheet, a list of the bank's assets and liabilities. As the name implies, this list balances, that is, it has the characteristic that total assets = total liabilities + capital
Furthermore, a bank's balance sheet lists sources of bank funds (liabilities) and uses to which they are put (assets). Banks obtain funds by borrowing and by issuing other liabilities such as deposits. They then use these funds to acquire assets such as securities and loans. Banks make profits by charging an interest rate on their holdings of securities and loans that is higher than the expenses on their liabilities.
The assets (uses of funds) of commercial banks include reserves, cash in process of collection, deposits at other banks, securities (government, state and local government and other securities), loans (commercial and industrial, real estate, consumer, interbank), and other assets (for example, physical capital).
The liabilities (sources of funds) of commercial banks include checkable deposits, non-transaction deposits (savings deposits, small-denomination -less than $100,000 - time deposits, large-denomination time deposits), borrowings, and bank capital.
PART III. BANKING
Дата публикования: 2014-12-25; Прочитано: 285 | Нарушение авторского права страницы | Мы поможем в написании вашей работы!
