4th Seminar.

Banking system

GB= ia- ip

Where: GB= gain of the bank

ia= Active interest and ip= passive interest

ia= interest collected by the bank for the loans granted

ip= interest paid by the bank for the deposits

Pr= GB – TC

Where: Pr= profit and TC= total cost

Pr
Rpr ( Kinv )= ∗10 0 where: Kinv=invested capital
Kinv

Exercises:

1. A bank receives deposits in a total of 100 million $ for which it pays an interest of
15% p.y. Out of this sum 72 million $ are granted as loans with an interest rate of
25%. What is the annual gain of the bank if the minimum reserve required is 20%?
What is the maximum sum that can be used by the bank in order to give credits and
what would be the gain of the bank in that situation?

2. During one year a bank has 400 billion $ available, out of which 90% are deposits
from clients. The bank granted credits at the maximum value permitted by the law.
The interest rate received from the borrowers is 1.5 times bigger than the interest
rate paid to the depositors. If the minimum reserve required is 15% and the bank
gains a profit of 20 billion $ for the functioning costs of 4 billion $, find:
a) The active interest rate and the passive interest rate
b) Total value of interest paid and interest collected
c) The profit rate regarding invested capital
d) If the minim reserve required would drop to 10%, what effects would it have on
the supply and profit of the bank?
Homework

3. The annual gain of the bank is 2 billion $. The banks own capital is 4,8 billion $ and
receives from deponents 25 billion $. The minimum reserve required is 16%. If the
interest paid for the deposits is 12%, what will be the collected interest rate?

4. During one year a bank has 400 billion $ available, out of which 95% are deposits
from clients. The bank granted credits at the maximum value permitted by the law.
The interest rate received from the borrowers is 1.5 times bigger than the interest
rate paid to the depositors. If the minimum reserve required is 10% and the bank
gains a profit of 10 billion $ for the functioning costs of 2 billion $, find:
a) The active interest rate and the passive interest rate
b) Total value of interest paid and interest collected
c) The profit rate regarding invested capital
d) If the minim reserve required would grow to 15%, what effects would it have on
the supply and profit of the bank?