The Sources and Uses of Funds for Financial Intermediaries: The Case of a Nigerian Bank
20 Pages Posted: 31 Jan 2017
Date Written: February 1, 2013
This paper analyses the sources and uses of funds of a financial intermediary: banks. A bank’s sources and uses of funds are embodied in its statement of financial position. The sources of funds are primarily deposits, borrowed capital and shareholders’ funds while the primary uses are loans and investments, defensive assets and required reserves. A bank’s health is measured by CAMELS. Specifically, Capital serves as buffer against losses, deposits are the primary source of liquidity while the quality of assets is enhanced when provisioning on possible losses do not crystallize. A tractable model of the banking firm is a prerequisite to economy-wide analysis of financial and monetary systems that rely heavily on intermediation and inside money.
Keywords: Sources and uses of funds, reserve regulations, bank capital, bank liquidity
JEL Classification: G20, G21, G28.
Suggested Citation: Suggested Citation