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Unformatted text preview: Income from these activities is their major source of revenue Banks play a central role in the market for loanable funds (capital market) They bring together savers and borrowers Banks provide services and pay interest to attract deposits Most of these deposits are invested and loaned out, providing interest income for the bank The U.S. banking system is a fractional reserve system Banks are required to maintain only a fraction of assets as reserves against customer deposits These are called required reserves Under a fractional reserve system, increase in deposits provides bank with excess reserves...
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This note was uploaded on 03/12/2012 for the course ECON 110 taught by Professor Heller during the Spring '12 term at Georgia Perimeter.
- Spring '12