The following points highlight the three main objectives of portfolio management by commercial banks. The objectives are: 1. Liquidity 2. Safety 3. Profitability. Portfolio Management: Objective # 1. Liquidity: A commercial bank needs a higher degree of liquidity in its assets. The liquidity of an assets refers to the ease and certainty with which it […]
3 Main Objectives of Portfolio Management
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Top 4 Theories of Liquidity Management
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The following points highlight the top four theories of liquidity management. The theories are: 1. The Real Bills Doctrine 2. The Shift-Ability Theory 3. The Anticipated Income Theory 4. The Liabilities Management Theory. Liquidity Management: Theory # 1. The Real Bills Doctrine: The real bills doctrine or the commercial loan theory states that a commercial […]
Limitations on the Power of Banks to Create Credit
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The following points highlight the ten major limitations on the power of banks to create credit. The limitations are: 1. Amount of Cash 2. Proper Securities 3. Banking Habits of the People 4. Minimum Legal Reserve Ratio 5. Excess Reserves 6. Leakages 7. Cheque Clearances 8. Behaviour of Other Banks 9. Economic Climate10. Credit Control […]