FINS1612 Chapter Notes - Chapter 2: Reference Rate, Scenario Analysis, Floating Charge
3 Nov 2020
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In australia, financial institutions that are approved to carry out financial intermediation are authorised by. Commercial banks are extremely important as they make up a significant part of the financial system ( ~50% of assets not including obs transactions) since being deregulated due to the rise of non-bank financial institutions in the 80"s (govt. Had to choose between total regulations or deregulating the commercial banks). Asset management (pre 1980"s) - loan portfolio tailored to available deposit base. Liability management (1980s ) - deposit base & other funding sources tailored to loan demand. The banks borrow direct from capital markets to meet forecast loan demand. Deposits - current (cheque/operating accounts) or call/demand deposits (savings accounts can withdraw on demand) Highly liquid for surplus units, stable accounts are maintained for future expenses or firm operating expenses. Term deposits - 1 month to 5 years. Fixed maturity sacrificing liquidity for return , investors tend to come here in times of market turmoil.
