What advantages do compensating balances have for banks? Are the advantages to banks necessarily disadvantages to corporations?
by 
Anonymous
ANSWERS: 1
-
Advantages for banks? The ending price of the loan is raised due to the borrower being unable to use all the funds that they are paying interest on else a raised interest rate. Also somewhat lesser hard feelings towards the customer since if the loan payments fall through they've got a little bit of gold melted to the bottom of the pot at the end of that debt filled rainbow. They can also tell their other leprechaun friends about that gold, including it in their investment strategies. Are they disadvantages to corporations? Assuming they don't jack your money you can't touch anyway you pay off your loan in full, rewards are most commonly labeled as "otherwise free services".
RELATED QUESTIONS
Copyright 2023, Wired Ivy, LLC