Bank Assets
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From
Wikipedia, the free encyclopedia
Fractional-reserve banking is the banking practice in which banks keep only
a fraction of their deposits in reserve (as cash and other highly liquid
assets) and lend out the remainder, while maintaining the simultaneous
obligation to redeem all these deposits upon demand.[1][2] Fractional
reserve banking necessarily occurs when banks lend out any fraction of the
funds received from deposit accounts. This practice is universal in modern
banking, and is to be contrasted with full-reserve banking which died out
over two centuries ago. |
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By its nature, the practice of fractional
reserve banking expands money supply (cash and demand deposits) beyond what
it would otherwise be. Because of the prevalence of fractional reserve
banking, the broad money supply of most countries is a multiple larger than
the amount of base money created by the country's central bank. That
multiple (called the money multiplier) is determined by the reserve
requirement or other financial ratio requirements imposed by financial
regulators, and by the excess reserves kept by commercial banks.
Central banks generally mandate reserve requirements that require banks to
keep a minimum fraction of their demand deposits as cash reserves. This both
limits the amount of money creation that occurs in the commercial banking
system, and ensures that banks have enough ready cash to meet normal demand
for withdrawals. Problems can arise, however, when a large number of
depositors seek withdrawal of their deposits; this can cause a bank run or,
when problems are extreme and widespread, a systemic crisis. To mitigate
these problems, central banks (or other government institutions) generally
regulate and oversee commercial banks, act as lender of last resort to
commercial banks, and also insure the deposits of the commercial banks'
customers. |
More related links about
Bank Assets
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PhD thesis: “Bank
assets and
banking theory”, Harvard University, January 1931[1]:
Chapter I: History of theory of
bank assets
...
www.emeraldinsight.com/10.1108/01443580410699312
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8 Jan 2010 ... State-rescued lender
Royal Bank of
Scotland said Friday it had agreed to sell
assets to
Aberdeen Asset
Management for almost 85 million ...
uk.news.yahoo.com/.../tbs-royal-bank-of-scotland-announces-ass-549cbb6.html
- United Kingdom
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Learn how to determine if your
assets are safe
or if your bank
has spread itself too thin.
www.investopedia.com ›
Articles -
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8 Jan 2010 ... Georgia Gibson-Henlin,
the lawyer representing creditor, Capital and Credit Merchant
Bank, which also
holds debentures over KES
assets, ...
www.jamaica-gleaner.com/gleaner/20100108/.../business2.html
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Chapter 7 discusses financial
assets: Cash,
Accounts Receivable, ... A
bank
reconciliation compares the information in the
bank statement
with the company's ...
www.middlecity.com/ch07.shtml -
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