banking as business

banking is business much like any other business.The commercial bank is a relatively simple business concern.A bank provides certain services for its customers and in return receives payments from them in one from or another.It tries to earn a profit for its stock owners .
A member bank,s balance sheet shows certain assets,liabilities,and capital owner-ship.Except for minor rearrangement,the bank,s published balance sheet looks much like the balance sheet of any business,and rather simpler than most.The only peculiar feature about the consolidated bank balance sheet shown in Table 16-1 is the fact that such a large portion of its liabilities are payable on demand;they are deposits subject to checking.And the vital reserves on which its deposit liabilities depend are,as we,ll see,created and controlled by the central bank.
This fact is intriguing to economists because we choose to call such demand liabilities money;but to the banker it is a familiar condition which has long since been taken for granted.He knows well that,although it would be possible for every depositor suddenly to decide to withdraw all his money from the bank on the same day,the probability of this is quite remote.Each day,as some people withdrawals.In a growing community,new deposits more than offset the withdrawals from an average bank.
This,however,need not be strictly true at any one moment,in any one day,Orin any one week.By chance alone the amount of withdrawals might exceed deposits for some period of time-just as a coin may land with heads,rather than tails,turned up for a consecutive number of tosses.For this reason,the banker would voluntarily keep a little cash-but only a little-handy in his vaults and perhaps as a " reserve deposit" at the nearby Federal Reserve bank.