Professional Documents
Culture Documents
CHAP - 03 - Managing and Pricing Deposit Services
CHAP - 03 - Managing and Pricing Deposit Services
CHAP - 03 - Managing and Pricing Deposit Services
DEPOSIT SERVICES
Chapter 3
William Chittenden edited and updated the PowerPoint slides for this edition.
12-2
Key topics
Non-transaction accounts
▪ Retirement savings deposits
▪ Individual Retirement Account (IRA) - the
Economic Recovery Tax Act of1981
institution
12-17
Core deposits
Core deposits
◼ A large proportion includes transaction deposits and
low-yielding time & savings deposits.
◼ Small time and savings deposits can be withdrawn
immediately, their effective maturity spans over years
◼ Increase bank’s liability duration and reduce interest
rate vulnerability
◼ Share in total deposits in small banks (80%) higher
than in large banks (63%) (FDIC: 2007)
◼ Declining trend due to inflation, deregulation, stiff
competition and better educated-customers.
Holders of deposits
corporation (75%)
depositors
▪ Cost-plus pricing
▪ Conditional pricing
▪ Relationship pricing
12-29
Estimating
Unit Price Operating Planned
Overhead
Charged the Expense Profit from
Expense
Customer = Per Unit of + + Each
Allocated to
for Each Deposit Service Unit
the Deposit
Service Service Sold
Function
12-31
deposits.
Marginal cost rate
Conditional pricing
income households.
12-42
Relationship pricing
Chapter 3
William Chittenden edited and updated the PowerPoint slides for this edition.