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the balance sheet of the commercial bank
A bank balance sheet is a financial statement that provides an overview of a
bank's financial condition at a specific moment in time. It represents the
bank's assets, liabilities, and equity.
It follows the accounting equation:
Assets=liabilities+owner equity
Consider a bank balance sheet as a snapshot of the bank's financial position.
It shows what the bank owns (assets) and owes (liabilities), and the net
ownership of the bank, which is the difference between assets and liabilities,
also known as equity.
Its components are:
Assets: These are resources owned by the bank. They generate income
and hold future economic benefits.
Liabilities: These are obligations the bank owes to others .
Equity: Equity is the value left after subtracting liabilities from assets.
It represents the ownership interest in the bank.
Depositors provide a major part of bank funds. As such, banks must invest
efforts to attract the money of depositors. Funds are collected mainly from
three sources:
Capital,Deposit and Borrowed funds
On the other hand, providing loans and investment are to use the funds of the
commercial bank.
Research refrences:
https://corporatefinanceinstitute.com/
https://www.ssrn.com/