What are the primary sources of bank funding?

Primary sources include customer deposits (checking, savings), wholesale funding (interbank borrowing, commercial paper), and equity capital issuance (stocks, retained earnings), alongside debt securities.

Why is bank funding important for the economy?

Bank funding is crucial as it enables banks to lend money to businesses and individuals, fostering investment, job creation, and overall economic growth and stability by ensuring credit availability.

How do interest rates impact bank funding costs?

Higher interest rates generally increase the cost for banks to attract deposits and borrow from wholesale markets, potentially reducing lending profitability and impacting credit availability.

What is wholesale funding in banking?

Wholesale funding involves large-scale borrowing from institutional investors, other banks, or capital markets, using instruments like commercial paper, bonds, or interbank loans, typically for short to medium terms.

How do regulations affect bank funding?

Regulations, such as Basel Accords, set capital requirements and liquidity ratios (e.g., LCR, NSFR) that influence how banks source and manage their funding to ensure financial stability and resilience.