Professional Documents
Culture Documents
Chapter 2 Financial Institution and Operations
Chapter 2 Financial Institution and Operations
Sources of funds
• Deposits-savings, demand, time
• Reserve requirement-portion of deposit
kept as a caution against possible bank
illiquidity
• Non-deposit borrowings
• Common stock and Retained earnings
Inst. Dr. Dagnu L. Capital Market
7 1/6/21
Regulation
• by the central bank
• areas of regulation include,
Ceilings on deposit interest
Permissible activities for CBs
Capital requirements
the
minimum Tier 1 capital (core capital)
requirement is 4% of book value of assets,
and minimum total capital is 8% of the risk-
weighted assets.
FUNDING
• Saving and time deposits
• NOW (Negotiable Order of Withdrawal)
–pays interest
• Borrow from the federal home loan
banks