Distinguish between assets and liabilities of commercial banks.

Assets of a commercial bank are possessions of the bank plus claims on other institutions and claims on its clients, they include

• Cash in hand- both local and foreign currencies
• Reserves with central bank
• Deposits with other banks and nonbanks
• Loans, advances and overdrafts to other banks.
• Fixed assets e.g. buildings and land
• Long term investments e.g. bonds
• Short term investments like treasury bills

Liabilities of commercial bank are clams against the assets of commercial banks i.e. claims by creditors and depositors (what the bank owes), they include

• Money on current, fixed and savings accounts.
• Deposits by other banks and non-banks
• Government funds deposited in the bank
• Dividends payable due
• Wages and salaries to employees
• bank borrowing from other institutions.