Term

Checkable Deposits, Nontransaction Deposits, and Borrowings

Definition

What are the Liabilities on the Bank Balance Sheet?

Term

Checkable Deposits

Definition

• Allows the owner (depositor) to write checks to third parties • Examples include: • Non-interest earning checking accounts • Interest earning negotiable orders of withdrawal (NOW) accounts • Money-market deposit accounts • Lowest cost funds – safe and liquid for depositor, so lowest interest rate offered • Make up about 10% of bank liabilities

Term

Nontransaction Deposits

Definition

• Primary source of bank liabilities (50%) • Accounts from which the depositor cannot write checks • Examples include: Savings accounts and Time deposits (Certificates of deposits) • For bank: highest cost of funding, but most stable