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BANK SOURCES OF FUNDS, USES OF FUNDS BY BANKS - Coggle Diagram

- - - - the interest rate and maturity types vary among banks
      - No secondary market
      - require a specified minium amount of funds to be deposited for a specified period of time
      - Cannot withdraw until the specified maturity or forgo a portion of the interest as a penalty
    - - Have a specified maturity date
      - Require a minium deposit
      - Short-term
      - Available secondary market
- - - - Capital Adequacy ratio
      - minium legal capital
- - - - Credit risk
      - a higher return than Treasury or government agency securities
    - - exhibit some degree of risk
      - provide an attractive after-tax return to banks.
  - - - turn a bank into an intermediary between the homebuyer and the investment industry
      - The bank handles the loans and then sells them at a discount
      - Safe
- - - - Not concerned with maintaining excess reserves
  - - - Meet customer's withdrawal needs
    - - Serves the purpose of mandatory reserves
- - - - Several banks may be willing to pool their available funds in a loan participation
    - - Arranging for the documentation, disbursement, and payment structure of the loan.
  - - - The bank may purchase the assets and lease them to the firm in need
    - - Allows the business to borrow up to a
        specified amount within a specified period of time.
    - - Used to finance the purchase off fixed asset such as machinery
    - - Obligates the bank to offer up to some Specified maximum amount of funds over a specified period of time
      - Typically less than 5 years
    - - To support ongoing business operation
        
        Short term
        
        Frequent basis
  - - - Provided for individuals to finance purchases of cars and household products
    - - Consumers who qualify, enabling them to purchase various goods without having a reapply for credit on each purchase.