Banking source of income

Bank commissions, fines and penalties are the bank’s source of income. What else do banks earn? The activities of all banks in the russian federation are commercial in nature. An exception is the central bank of the russian federation, which is obliged to regulate the work of its “wards”. Commercial activity of any organization implies the direct receipt of profit from various operations (some of them are subject to mandatory licensing). So how do banco de venezuela banks make a profit for themselves? After all, if we talk about the amounts, then they have a very large-scale significance. Why do many people think that banks “make money from the air”? Is it so? All this, and other related issues, will be discussed in this article.


Subjective concepts of cash flow

In a fundamental economic sense, the entire monetary system of a country is held in the hands of the central bank (the regulator of commercial banks). That is, the monetary system is launched by the central bank, and commercial banks are already able to earn money by circulating money.

However, the central bank www.banco banesco of england recently destroyed this stereotype, saying that commercial banks can create money on their own. In the i quarter of 2014, the central bank of england issued a newsletter that featured an article on the nature of the nature of the appearance of money in the modern economy. As soon as the bank issues a loan, new money is created (that is, it erases the concept of the deposit-loan-bank circulation cycle). By the way, the english central bank is one of the oldest central banks, which was created in the xii century.

It is impossible to judge exactly how the banking system really works. That is, it is impossible to precisely state which process launches the further cash flow. Here are the banking projects for stable banking

The classical paradigm of the russian banking system

The classic paradigm in russia remains the following model of banking money circulation:

  1. The client makes a certain amount of money on his deposit (opens a cash deposit);
  2. The bank sets aside a certain% of this amount in reserve ;
  3. The bank directs the remainder of the invested customers to issue loans.

It is worth noting that deposit rates are almost double (now slightly less) than loan rates. Consider the “ bank greed rating ” according to the website. This portal conducted a study of top banks that issued 85% of all consumer loans. Given approximately the same bank deposit rates in the country, you can imagine how much profit these banks received.

It is very beneficial for banks to attract deposits, as this is “ cheap ” money. The interest on them is quite low for the bank, but the profit that the bank receives by issuing loans for this amount is several times higher than the cost of paying interest to deposit holders. The bank banco bicentenario takes risks only when the mass closure of deposit accounts begins , then its system will simply collapse, since there is not enough reserve funds to pay such an amount of obligations. The more depositors the bank has, the less likely it is that all of them will come to the bank at the same time to close their account or to withdraw cash (except in cases of force majeure and times of acute crisis). This allows the bank to have a stable reserve (as a rule, it is 5-10% of the deposit amount). The remaining 90-95% of the amount of deposits will be issued for loans. They create an increasing number of customer debts, respectively, new cash. Just go with banking techniques here

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