The Business of Banks
It is hard to deny that we live in a money based society. Nothing is truly free and the prosperity of our lifestyles is closely related to our economic standing. From the wall street "suits" to the farmer dressed in Carharts, we all share one common link- banks. I can't imagine one adult person in America who does not patronize a bank in way or another. Most of us use banks quite frequently, but they are often casually regarded until you really stop to look at the way a bank operates. The bottom line is that a bank is a business. Their goal of operation is to generate a profit, just like any other business. The interesting fact, though, is that they do it by The bank monitors its financial operations the same as any other business, by analyzing their assets and liabilities in a form of balance sheet. Items categorized on a bank's balance sheet are a little more complicated that most others because a line item, such as a loan, can technically be an asset or a liability depending on the specifics of that line item. Even something as seemingly simple as an account in which a customer deposits money may be an asset or a
I immediately contacted the bank and a teller coldly told me that I should have checked to make sure they did their job to make the transfer post and that she could not help me. A bank must borrow funds when it does not have enough funds available to meet the federal requirement. You may assume that a person with credit blemishes would then always be denied for a loan, but that is not the case either. This is an overview of how banks manage money. The list of assets a bank has is one part of the liabilities/ assets calculation that determines if a bank is generating a profit. There is an added risk of default, but the potential gain makes the added risk worth it. offers an interest payment to the owner, their money is held for the term of the contract. One common type of instrument is a C. Securities are debt instruments owned by outside entities, usually federal agencies or state and local government entities. When a bank borrows money, it can simply be for an overnight usage. I want to feel that the bank is interested in making my $75,000 home loan even though the guy behind me is borrowing $350,000. The key factor in their scrutiny is the risk associated to the potential borrower. Many of these profits are reinvested into the business to draw customers with a pompous looking building with fountains and shiny glass doors.
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