Analysis of cash flow – way to assess the creditworthiness of the customer of a commercial bank, which is based on the use of actual indicators of turnover at the client during the reporting period. This method of analysis of cash flow is fundamentally different from the method of assessing creditworthiness of the customer on [...]
Business risk – the risk associated with that cycle funds the borrower may not be completed on time and with prospective effect. Business risk factors are different causes that lead to continuity or delay cycle funds in separate stages. Business risk factors can be grouped by stage of the circuit.
Stage I – establishment of reserves:
Although the crucial feature of money is its acceptance as the means of payment оr medium of exchange, money has other functions. It serves as a standard of-value, a unit of account, a store of value and ft a standard of deferred payment. We discuss each of the functions of money in turn.
The Medium of [...]
In prisoner-of-war camps, cigarettes served as money. In the 19th century money was mainly gold and silver coins. These are examples of commodity money, ordinary goods with industrial uses (gold) and consumption uses (cigarettes), which also serve as a medium of exchange. To use a commodity money, society must either cut back on other uses [...]
The following story is going to explain the role of banks. In the past most societies used different objects as money. Some of these were valuable because they were rare and beautiful, others- because they could be eaten or used. Early forms of money like these were used to buy goods. They were also used [...]
The goldsmith bankers were an early example of a financial intermediary.
A financial intermediary is an institution that specializes in bringing lenders and borrowers together.
A commercial bank borrows money from the public, crediting them with a deposit. The deposit is a liability of the bank. It is money owed to depositors.
Таbl. 7 shows the balance sheet of the London clearing banks. Although more complex, it is not fundamentally different from the balance sheet of the goldsmith-banker shown in Таbl 6. We’ll begin by discussing the asset side of the balance sheet.
Today, it is impossible to manage a business operation without accurate and timely accounting information. Managers and employees, lenders, suppliers, stockholders, and government agencies all rely on the information contained in two financial statements. These two reports — the balance sheet and the income statement — are summaries of a firm’s activities during a specific [...]
Creditworthiness of commercial banks’ clients – the ability of the borrower in full and on time to pay its debts (principal and interest).
Creditworthiness of the borrower, in contrast to its ability to pay does not fix the defaults in the intervening period or at any date, and predicts the ability to repay debt in the [...]
By passive credit transactions primarily include deposit transactions.
Deposit called the operations of banks to attract funds from legal entities and individuals in deposits, or on certain dates or on demand. The share deposit transactions usually account for the bulk of their liabilities.
As subjects of the deposit operations may be:
