Resources of commercial banks: their structure and characteristics
Category: Concept of the Bank and the Banking System
Commercial banks, like other subjects of economic relations, to ensure its commercial and business must have a certain amount of money, ie, resources. Under modern conditions of economic development problem of the formation of resources is of paramount importance. This is because the transition to a market economy model, the elimination of state monopoly on banking, building a two-tier banking system the nature of bank resources is undergoing significant changes. This is because, firstly, greatly narrowed nationwide fund banking resources and the scope of its operations concentrated in the first link of the banking system — the Central Bank. Secondly, the formation of companies and organizations with various forms of ownership means the emergence of the new owners of temporary free funds, independently determining the location and method of storing money, creating a market of credit resources, organically included into the system of monetary relations.
In addition, the scope of activities of banks, defined by the object of its active operations, depend on the totality of resources available to them, especially the amount of borrowed resources. This situation aggravates the competition between banks to attract resources.
Simultaneously with the market credit starts functioning securities market, where banks are the sellers or buyers of their own government and corporate securities. Availability of insurance, financial and other lending institutions will intensify competition in the market of credit resources and exacerbates the accumulation of banks temporarily idle cash.
Resources of commercial banks or bank resources, represent a set of own and borrowed funds at his disposal and used to carry out active operations.
By way of education, all commercial banks’ resources are divided into equity and debt (borrowed).
The main source of commercial banks’ resources are borrowed funds, constituting about 70-80% of total bank resources. The share of own funds of banks to between 22 and 30%, which is broadly in line with the existing structure of the global banking practice. As part of its own funds the bulk of the bank accounts for different funds. The second part of its own funds — profits this year.
For the structure of attracted funds of commercial banks is characteristic of a high proportion of funds held in the settlement and other accounts that make up the deposits. Share of this resource category is 64.3%. The share of fixed deposits account for only 23.5% of them on deposit with commercial structures and deposits of the population — 5%, the banks — more than 18%.
The structure of the banking resources of individual commercial banks is very varied, because of its individual features.