Activities of a bank Flashcards
1
Q
What are core banking services (3)?
A
- Deposit collection
- Payment services
- Loan underwriting
2
Q
What is the process called where banks channel savings from depositors to borrowers?
A
Financial intermediation
3
Q
What is it called when deposits are converted into loans
A
Asset transformation
4
Q
How is money created?
A
Financial intermediation + asset transformation
5
Q
How do you calculate the money multipler?
A
1/reserve ratio
6
Q
What are a bank’s income streams?
A
- Difference between interest earned on loans vs. interest paid on deposits.
- Fee income for cash management, investment, brokerage, investment banking, derivative trading, letters of credit, insurance, trust and risk management services.
