HSC Finance, Banking, and Bima 2nd Paper 7th Chapter Note Sources & uses of Bank Funds. This paper analyses the sources and uses of funds of a financial intermediary: banks. A bank’s sources and uses of funds are embodied in its statement of financial position. The sources of funds are primarily deposits, borrowed capital, and shareholders’ funds while the primary uses are loans and investments, defensive assets and required reserves. A bank’s health is measured by CAMELS. Specifically, Capital serves as the buffer against losses, deposits are the primary source of liquidity while the quality of assets is enhanced when provisioning on possible losses do not crystallize.
HSC Finance, Banking, and Bima 2nd Paper 7th Chapter Note Sources & uses of Bank Funds
A tractable model of the banking firm is a prerequisite to the economy-wide analysis of financial and monetary systems that rely heavily on intermediation and inside money. Commercial banks obtain most of their funds by accepting deposits from investors. These investors are usually individuals, but some are firms and government agencies that have excess cash.
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