Banks – Core Banking Concepts
Banks are intermediaries whose primary function was to mobilise deposits (bank liabilities) and disburse loans (assets). However as banks evolved they played a key role in other sectors of the economy such as investments, trade finance, payments, mergers and acquisitions and more.
To understand the basics of banking we begin with core concepts such as –
- Warehouse Banking – we understand the primary function of banking, which is deposit mobilisation
- Fractional Reserve banking -Â banking loan innovation whereby deposits act as a reserve. The one to one deposit to cash in vault relationship no longer holds true in a fractional reserve bank
- Banking Assets and Liabilities -Â We study bank’s assets and liabilities in more depth
- Computing a Bank’s Profitability -Â We learn how a bank’s profits are calculated and the restrictions placed on bank’s that limit its profitability
- Liquidity Management – How banks fund their long term assets with short term liabilities
- Asset-Liability Management -Â Managing asset liability mismatches that arise due to differences in tenors.
In addition to Core banking concepts we will study various other functions in banks such as
- Trade Finance
- Treasury – Bond, FX, Money Markets and more