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 […]
Archives for the ‘Concept of the Bank and the Banking System’ Category
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.
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 […]
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:
By passive means such transactions of banks, that result in an increase in funds held in accounts of passive or active-passive accounts in excess of the array of assets (in the balance sheet of banks active-passive accounts there). Passive operations play an important role for commercial banks. With their help banks get loans in the […]
The main purpose of bank statements – to be a source of reliable, complete and rapid economic information on the activities of the bank. Bank statements should be clear to existing and potential investors and lenders to give them an idea of the amount, time and risks associated with expected revenues, to provide information on […]
Liquidity of commercial banks as a qualitative state, that are affected by many factors, it is difficult to measure. This is evidenced by international experience of assessing the liquidity of commercial banks. Typically, there are two methods of measurement of liquidity: