FIN 3636 Chapter : Chapter 13 Notes
Document Summary
Chapter 13 managing nondeposit liabilities and other sources of borrowed funds. The first priority of the bank is to make loans to all qualified customers. If funds are not available the bank should seek out the lowest cost source of funding to meet customers" needs. Liability management the bank borrows funds in order to satisfy loan requests and reserve requirements. It is an interest sensitive approach to raising bank funds. It is flexible the bank can decide exactly how much they need and for how long. The control mechanism to regulate incoming funds is the price of funds. Deposits help by u. s. banks at federal reserve banks. Demand deposit balances of security dealers and governments. Can be used for loans to institutions. The most popular domestic source of borrowed reserves. Money at the fed to satisfy legal requirements, clear checks, and pay for purchases of government securities. Overnight loans loans made in one night.
