Lesson+1--What+Is+A+Bank

Lesson+1--What+Is+A+Bank - Lesson 1What Is a Bank? M&B...

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Lesson 1—What Is a Bank? M&B Chapter 2 Banking Basics , Federal Reserve Bank of Boston http://www.bostonfed.org/education/pubs/ bankingbasics.htm
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What Is A Bank? A Place for the Safe- Keeping of Money A Place On Which Checks Can Be Written Channels funds to borrowers (providing for a return to savers)
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A Bank is a Financial Intermediary
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A Bank is basically a “T-Account” assets = liabilities + bank capital
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Bank Assets Include: Bank Building & Furniture, etc Cash in Vault Deposits at Other Banks (including the Fed) Securities (Treasury bills, bonds, etc) Loans
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During “Good Times” Banks Are Happy to make loans, But in “Bad Times” favor less risky securities….Why?
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Bank Liabilities Include: Demand Deposits (checking accounts) Various forms of savings accounts Large Certificates of Deposits (CDs) Other borrowed monies
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How Do Commercial Banks Make Money? They earn more interest on assets than they pay on liabilities Commercial Banks Week Ending August 17, 2011 ($blns, seasonally Adjusted) assets liabilties 9280.7 Bank Credit 8380.1 Deposits 2468.3 Securities 1560.6 Large Time Deposits 1670.6 Treasury/Agencies 6819.6 OtherDeposits 1182.7 Agency MBS 487.9 Non-MBS Treasury/Agency 797.7 Other Securities 1661.8 Borrowings 175.1 Borrowing From Banks in US 6812.4 Loans & Leases 1486.7 Borrowing Others 1285.8 Commercial & Industrial 3481.5 Real Estate 295.3
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Lesson+1--What+Is+A+Bank - Lesson 1What Is a Bank? M&B...

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