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Types of Sources From Which Banks Obtain Funds

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What are the main source of funds for banks?

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Solution Summary

This solution provides you with information about some of the sources from which banks obtaining funding in order to support lending to its varied customers.

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Generally speaking, banks require funds to support lending to home buyers, credit card customers, small and medium businesses, and institutional clients; and, there are two main sources from which banks may obtain these funds to lend. These are either from the bank's own funds or from borrowed funds.

A bank's own funds are mainly of three types:

i. Equity or Paid-up capital - Paid-up capital is the portion of authorized capital of the bank which is fully paid by shareholders. ...

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