FIN366 Financial Characteristics

FIN366 Financial Characteristics - Financial...

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Financial Characteristics 1 Financial Characteristics Introduction
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Financial Characteristics 2 Banks fulfill a wide range of financial operations in order to meet the financial needs of all types of customers. Commercial banks accept deposits and provide individuals and businesses with loans. This type of financial entity operates with the objective of making a profit; commercial banks charge their customers for using their services and borrowing their funds. This paper will the characteristics of commercial banks operations by discussing the services provided, the main sources and uses of funds, how these banks compete with other financial institutions, and the effect of federal policies have on them. Provided Services Commercial banks provide a variety of financial products and services to customers. These products and services include asset and liability products, electronic banking, and other services. Asset products are auto loans, credit cards, mortgages, and personal and business loans (King, 2011). The interest revenue with asset products is the major contributor to profits earned for commercial banks (King, 2011). Liability products are certificates of deposit, checking, and savings accounts, and other types of deposit products (King, 2011). With the exception of checking accounts, liability products earn interest based on the type and term of the deposit for the depositor (King, 2011). Electronic banking services include 24-hour ATM networks, banking websites that allow customers access to account information, bill payments, open new accounts, order checks, transfer fund between accounts, and wire transfers (King, 2011). Other services include those in which customers earn fees. This would include corporate finance consulting, custodial services for estates and trusts, money transfer services, investment advisory services, securities, and other valuable items safekeeping (King, 2011). Commercial
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Financial Characteristics 3 banks serve two types of customers, savers, and borrowers. Deposits are accumulated from savers and used to provide credit borrowers. Commercial banks use and source of funds Commercial banks have many sources of income and use funds in a number of ways. Commercial banks used to be specialized. Banks used to come in different flavors. Commercial banking, Retail banking and personal banking used to be their own entities. Some still exist today, but the lines are blurred. Banks generally offer the same type of banking products and services. With commercial banks they used to cater to businesses primarily with business loans
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This note was uploaded on 08/22/2011 for the course BUS 415 taught by Professor Barnes during the Spring '11 term at Coastal Carolina University.

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FIN366 Financial Characteristics - Financial...

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