Latest posts
-
🍕 I. CHOICE OF FUNDS — WHO YOU GONNA CALL WHEN DEPOSITS GHOST YOU?
Factors affecting the choice of non-deposit funding sources. When deposits aren’t enough, banks knock on the doors of the money and capital markets. But choosing the right funding source is like picking the right topping: it depends on price, taste, shelf life, and how spicy it can get. 🧮 Key factors include: âť“What’s the cheapest…
-
🏦 NONDEPOSIT LIABILITIES AND THE $($AFG$)$: WHEN BANKS NEED TO BORROW LUNCH MONEY
Imagine a bank as a well-dressed professional—smart blazer, sharp tie, shiny shoes—who pays their bills using two pockets: the Deposit Pocket and the Nondeposit Pocket. Now, most of the time, the Deposit Pocket is full because people trust the bank with their savings. But when times get tough or customer loans increase faster than deposits,…
-
CHALLENGES TO OFFERING DEPOSIT ACCOUNTS
đź’° 1. Deposit Insurance The Federal Deposit Insurance Corporation $($FDIC$)$, established in 1934, insures deposits in member banks. The current insurance limit is \$250,000 per depositor per insured bank. This means if Bank A fails, the FDIC steps in and reimburses customers—up to the insured amount. Key Point: You can increase your coverage by having…
-
💰 Methods of Pricing Deposits – Turning Dollars into Strategy
Banks aren’t just piggy banks in suits. They’re financial jugglers trying to balance paying you just enough interest so you hand over your $($money$)$—but not so much that they end up broke. So how do they decide what to offer you on your $($savings$)$? Enter: deposit pricing. Let’s explore the main methods banks use to…
-
đź’¸ TRANSACTION AND NON-TRANSACTION DEPOSITS: THE BATTLE OF THE BANK BALANCE
Let’s face it: banks are like squirrels—always hoarding nuts $($a.k.a. money$)$ for winter. But where do they get those nuts? Enter the world of deposits—the life force of banks, credit unions, and S&Ls $($savings and loans$)$. Let’s take a stroll through the deposit forest and see what kinds of financial acorns we’re dealing with. 🌰…
-
🚨 The Secret Recipe for Survival: Components of a Contingency Funding Plan $($CFP$)$
Imagine you’re a ship captain navigating stormy seas. The storm here? A financial crisis. Your ship? The bank. And your contingency funding plan? The life raft, flare gun, and the snack pack all rolled into one. So, what’s in this magical raft? Let’s unpack the essential components of a CFP and understand how they keep…
-
🧯Contingency Funding Planning: The Fire Drill for Financial Firms
Imagine running a five-star hotel. You have luxury rooms, gourmet chefs, celebrity guests—and then someone accidentally sets the kitchen on fire. Do you have an evacuation plan? A backup kitchen? A hotline to the fire brigade? Welcome to the financial world’s version of a fire drill: Contingency Funding Planning $($CFP$)$. When liquidity dries up and…
-
đź’§ LIQUIDITY STRESS TESTS: When Banks Take Their Own “Cold Showers”
When you hear “stress test”, you might imagine a treadmill, a heartbeat monitor, and a worried-looking doctor. But for banks, it’s much more about whether they’ll survive a financial marathon or collapse before reaching the finish line. Enter the Liquidity Stress Test, our financial treadmill of doom—designed to simulate crisis scenarios and assess if banks…
-
đźš° LIQUIDITY RISK REPORTS: A Regulatory Love Story with Spreadsheets
Imagine your bank as a giant water tank. You have water $($cash$)$ flowing in through deposits and investments, and flowing out through loans and liabilities. Now picture the regulators as very picky health inspectors who want daily updates on whether your tank is overflowing or about to dry up. That’s where liquidity risk reports come…
-
đź’§ Liquidity Stress Test Design Issues – Why It’s Not Just a Fancy Panic Attack Simulator
Imagine you’re organizing a party… for your entire bank. Everyone’s invited — the regulators, the shareholders, and yes, even Murphy’s Law. So how do you prepare? Simple: you stress test your liquidity — because when the music stops and everyone wants their money back, the last thing you want is to be left holding an…