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I Need the Definition of...

117 Banking Fully Explained For You
Ability to Pay
Ability to pay refers to a borrower’s capacity to make good on his loan obligations. In banking, ability to pay is often called “financial capacity.” See More.
Account Balance
An account balance is a statement of how much money is in an account. See More.
Account Freeze
Also called an account hold, an account freeze occurs when a bank or other financial institution prevents any transactions from hitting an account. See More.
Account Hold
Also called an account freeze, an account hold occurs when a bank or other financial institution prevents any transactions from hitting an account. See More.
Average Balance
Average balance is either the simple or the weighted average balance of a financial account during some period of time. See More.
Average Daily Balance Method
The average daily balance method is a way of calculating interest by considering the balance owed or invested at the end of each day of the period rather than the balance owed or invested at the end... See More.
Bad Bank
A bad bank is a new company created to buy poorly-performing assets from another bank. See More.
Bad Check
A bad check is a check written on an account that doesn't have enough funds to cover the amount of the check. See More.
Bank Card
A bank card is a plastic card issued by a financial institution that allows the user to make purchases with funds either borrowed from or held at that financial institution. See More.
Bank Card Association
A bank card association is a company owned by one or more financial institutions that licenses credit card programs. See More.
Bank Credit
Bank credit is an amount of funds that a person or business can borrow from a bank. See More.


Bank Debits
Bank debits are reductions in customer accounts. See More.
Bank Deposit
In the finance world, a bank deposit is the placement of funds in an account with a bank. See More.
Bank Deposit Agreement
A bank deposit agreement, also called a Bank Investment Contract (BIC), is an agreement between a bank and an investor where the bank provides a guaranteed rate of return in exchange for keeping a... See More.
Bank Deposits
A bank deposit is the placement of funds in an account with a bank. See More.
Bank Draft
A bank draft is a check that a bank guarantees. See More.
Bank Efficiency Ratio
A bank efficiency ratio is a measure of a bank's overhead as a percentage of its revenue. See More.
Bank Endorsement
A bank endorsement is an assurance that it will stand behind a check or other negotiable instrument that one of its customers creates. See More.
Bank Examination
A bank examination is a regular process of ensuring that a bank or lending institution is financially stable and obeying regulations while avoiding excessive risk. The CAMELS is a system used to rate... See More.
Bank Failure
A bank failure occurs when a regulator closes an insolvent bank. An insolvent bank can't meet its obligations to depositors (e.g., it doesn't have the money to meet withdrawal demands) or to... See More.
Bank for International Settlements (BIS)
Based in Basel, Switzerland, the Bank for International Settlements (BIS) acts as a bank for central banks around the world. See More.


Bank Guarantee
A bank guarantee is a promise from a bank or other lending institution that if a particular borrower defaults on a loan, the bank will cover the loss. Note that a bank guarantee is not the same as a... See More.
Bank Holiday
A bank holiday is a day on which a bank or banking system is closed. See More.
Bank Identification Number (BIN)
A bank identification number (BIN) identifies and verifies parts of a bank transaction. See More.
Bank Investment Contract (BIC)
A bank investment contract (BIC), also sometimes called a Bank Deposit Agreement, is an agreement between a bank and an investor whereby the bank provides a guaranteed rate of return in exchange for... See More.
Bank Rate
Also called the federal discount rate, the bank rate is the interest rate at which a bank can borrow from the Federal Reserve.   See More.
Bank Reserve
A bank reserve is a portion of a bank's deposits that are set aside in a liquid account to ensure that the bank has enough cash on hand to fulfill withdrawal requests. See More.
Bank Run
A bank run occurs when a flood of depositors withdraws funds from a bank within a short time frame. See More.
Bankmail
Bankmail is a bank's promise that it will finance a company's takeover bid and not help the other bidders. See More.
Bankruptcy
Bankruptcy is a legal process under which a borrower protects and/or liquidates assets in order to repay debts. See More.
Bounced Check
When a check is refused by a bank and returned to the person who wrote it due to insufficient funds, it is called a bounced check. See More.


Canceled Check
A canceled check is a check that has cleared or prevented from clearing. See More.
Capital Dividend Account (CDA)
A capital dividend account is a special account that companies use to pay tax-free dividends to shareholders. See More.
Cashier's Check
A cashier's check is a check that guarantees the availability of the underlying funds because it is drawn upon and issued by the bank itself. See More.
CD Ladder
A CD ladder is an investing strategy whereby the investor staggers the maturity of ("ladders") the certificates of deposit in his portfolio so that the proceeds can be reinvested at regular intervals... See More.
Central Bank
A central bank is an institution responsible for determining the monetary policy of a nation or group of nations.  See More.
Certificate of Deposit (CD)
A certificate of deposit (CD) is a relatively low-risk debt instrument purchased directly through a commercial bank or savings and loan institution. See More.
Certified Check
A certified check is a check for which the issuing bank guarantees payment. See More.
Collateral
Collateral is an asset pledged by a borrower to a lender, usually in return for a loan. The lender has the right to seize the collateral if the borrower defaults on the obligation. See More.
Commercial Bank
A commercial bank is a financial institution that offers checking accounts, demand deposits, business and personal loans, savings vehicles and a variety of other related financial services. See More.
Commercial Paper
Commercial paper is an unsecured and discounted promissory note issued to finance the short-term credit needs of large institutional buyers. Banks, corporations and foreign governments commonly use... See More.


Credit Union
A credit union is a financial institution that is owned and controlled by its members rather than shareholders. The members of the credit union pool their deposits and provide loans and other... See More.
Creditor
A creditor is an individual or institution that lends money or services to another entity under a repayment agreement. See More.
Debit
A debit is an accounting record that represents either an increase in assets or a decrease in liabilities or net worth. A debit is the opposite of a credit. See More.
Debtor in Possession (DIP)
Debtor in possession (DIP) refers to the status of a business that retains control of its assets and continues to operate while under the Chapter 11 bankruptcy reorganization process.   See More.
Debtor-in-Possession (DIP) Financing
Debtor-in-possession (DIP) financing refers to financing for a business that retains control of its assets and continues to operate while under the Chapter 11 bankruptcy reorganization process... See More.
Euro Interbank Offered Rate (EURIBOR)
Euro Interbank Offered Rate (EURIBOR), is the rate at which European banks offer to lend unsecured funds to each other in the euro market. See More.
Eurobank
A eurobank is a financial institution that makes loans and accepts deposits in foreign currencies -- simplifying international trade, transactions and investing. See More.
Federal Reserve Bank
Federal Reserve Bank refers to any of the 12 branches of the Federal Reserve System overseeing the implementation of U.S. monetary policy.  See More.
Firewall
Firewall refers to the strict separation between banking and brokerage activities within full-service banks, and between depository and brokerage institutions as stipulated by the Glass-Steagall Act... See More.
Fixed Interest Rate
A fixed interest rate is a type of loan or mortgage for which the rate of interest does not fluctuate over the life of the loan. See More.


Frozen Account
A frozen account refers to a situation where an individual is unable to withdraw money from a bank account due to a court order. See More.
Group Banking
Group banking is offered by some banks to incentivize a whole group of people, like employees of a company, to have a relationship with the banking institution. See More.
High Street Bank
A High Street Bank is a retail bank in the United Kingdom that has many locations. See More.
Insolvency
In most usages, insolvency is the inability of a company or individual to meet its financial obligations as they come due. In the legal sense of the word, an entity is considered insolvent if its... See More.
Installment Debt
Installment debt refers to any loan that is repaid by the borrower in periodic (usually monthly) installments that include principal and interest. See More.
Interbank Rate
LIBOR is one of the most widely used benchmarks for short-term interest rates and is unlike the prime rate in the United States, which is somewhat arbitrarily based on certain banks' lending... See More.
Interchange Fees
The term interchange fees, also known as swipe fees, refers to the hidden cost paid by merchants to card-issuing banks and credit card companies for processing credit card and debit card transactions. See More.
Interest
Interest is the cost of borrowing money for a certain period of time. See More.
International Banking Facility (IBF)
An international banking facility (IBF) is a segregated branch of a domestic bank or financial institution available to only foreign customers. See More.
Investment Bank
An investment bank is a financial intermediary that specializes primarily in selling securities and underwriting the issuance of new equity shares to raise capital funds. This is different from a... See More.


Investment Banking
Investment banking is a category of financial services that specializes primarily in selling securities and underwriting the issuance of new equity shares to help companies raise capital. Investment... See More.
IOU
The term IOU is the phonetic spelling of the phrase "I Owe You." In bookkeeping, it signifies an outstanding debt. See More.
Johannesburg Interbank Agreed Rate (JIBAR)
JIBAR is a market indicator and a benchmark for various interest rates in South Africa. See More.
Lead Bank
Lead banks grease the skids for bringing securities to market. Issuers compensate them for this by paying a spread, which is the difference between what the issuer receives per share and what the... See More.
Letter of Credit
A letter of credit is a bank's written promise that it will make a customer's (the holder) payment to a vendor (called the beneficiary) if the customer does not. See More.
Leverage
Leverage is any technique that amplifies investor profits or losses. It's most commonly used to describe the use of borrowed money to magnify profit potential (financial leverage), but it can... See More.
Liability
In finance and investing, a liability is a claim on a company's assets. See More.
Lien
A lien is a lender's claim against a collateral asset that may be legally sold should the borrower fail to repay a loan. See More.
Line of Credit (LOC)
A line of credit (LOC) is an arranged amount of standing credit that a bank's customer may draw upon at any time. See More.
Liquidation
Liquidation refers to the selling of assets in return for cash.  See More.


London Interbank Offered Rate (LIBOR)
The London Interbank Offered Rate (LIBOR) is the base lending rate banks charge each other in the London wholesale money market. See More.
Long-Term Debt
Long-term debt is debt due in one year or more. It is a key item that appears on a company's balance sheet. See More.
M Banking
M banking is the use of a smartphone or other cellular phone to conduct tasks such as monitoring account balances, transferring funds between accounts, bill payment and locating an ATM while away... See More.
Merchant Bank
A merchant bank is a financial institution that engages in underwriting and business loans, catering primarily to the needs of large enterprises and high net worth individuals. In the British market... See More.
Mobile Banking
Mobile banking refers to the use of a smartphone or other cellular device to perform online banking tasks while away from your home computer, such as monitoring account balances, transferring funds... See More.
Mobile Banking Definition
Mobile banking refers to the use of a smartphone or other cellular device to perform online banking tasks while away from your home computer, such as checking account balances, transferring funds... See More.
Mobile Phone Banking
Mobile phone banking is the use of a smartphone or other cellular device to accomplish tasks such as checking account balances, transferring funds between accounts, bill payment and finding an ATM... See More.
Mutual Savings Bank
A mutual savings bank (MSB) is a type of financial institution that functions much like a bank, but with a different ownership structure. Instead of shareholders owning marketable shares, a mutual... See More.
National Bank
A national bank is a bank that is a member of the Federal Reserve system and the Federal Deposit Insurance Corp. In global terms, a national bank is a country's central bank. In this context... See More.
National Bank Surveillance System
The National Bank Surveillance System is a computer system that collects financial information about banks. See More.


National Credit Union Administration (NCUA)
The National Credit Union Administration (NCUA) is an agency of the United States government that charters and oversees federal credit unions. It was created by Congress in 1970. See More.
Off-Premise Banking
Off-premise banking refers to regular banking transactions that happen outside of a physical bank, typically at automated teller machines (ATMs). See More.
Official Settlement Account
An official settlement account is an account that records transactions of foreign exchange reserves, bank deposits and gold at a central bank. See More.
On Account
Buying things on account is similar to saying, "put it on my tab." Eventually, however, you have to pay the tab. In our example, the transaction requires careful accounting. Once Company XYZ... See More.
Online Banking
Online banking enables bank customers to handle account management and perform account transactions directly with the bank through the internet.  This is also known as internet banking. See More.
Organization for Economic Cooperation and Development (OECD)
The Organization for Economic Cooperation and Development (OECD) is an international economic forum that pursues cooperative approaches to common issues affecting individual members as well as the... See More.
Past-Due Balance Method
The past-due balance method is a system for calculating interest charges based on loan or credit balances not paid prior to a specified due date. See More.
Paycheck-to-Paycheck
Paycheck-to-paycheck means a lifestyle in which a person does not save money and would incur significant financial stress if he or she does not receive his or her next paycheck. See More.
PIN-Debit Transaction
A PIN-debit transaction, also known as an online transaction, is a password-protected payment method that authorizes a transfer of funds over an electronic funds transfer (EFT) See More.
Prepackaged Bankruptcy
Prepackaged bankruptcy refers to a plan for reorganization under Chapter 11 that a company drafts in cooperation with its lenders. See More.


Prime Rate
The prime rate is the interest rate commercial banks charge their most creditworthy customers, which are usually corporations. See More.
Principal
In finance,  principal refers to the face amount of a debt instrument or an amount of money borrowed. See More.
Quick-Rinse Bankruptcy
A quick-rinse bankruptcy moves through the courts especially quickly. See More.
Rain Check
A rain check is a written promise from a seller to a buyer. It guarantees that a buyer can purchase a product for a certain price at a later date, usually because the item is out of stock. See More.
Ratings Service
Ratings Service is provided by companies that evaluate the risks associated with debt securities.  See More.
Repayment
Repayment usually refers to the payments on a debt.  See More.
Repurchase Agreement (Repo)
A repurchase agreement is the sale of a security combined with an agreement to repurchase the same security at a higher price at a future date.  It is also referred to as a "repo."  See More.
Retail Banking
Retail banking refers to the consumer-oriented services offered by commercial banks. These services include checking and savings accounts, mortgages and various types of loans and investment services... See More.
Savings
In economics, savings is the amount that is left after spending. In banking, savings refers to savings accounts, which are short-term, interest-bearing deposits with a bank or other financial... See More.
Savings Account
A savings account is a low-risk, interest-bearing deposit with a bank or other financial institution. See More.


Shadow Banking System
The shadow banking system (or shadow financial system) is a network of financial institutions comprised of non-depository banks -- e.g., investment banks, structured investment vehicles (SIVs),... See More.
Signature-Debit Transaction
A signature-debit transaction, also known as an offline transaction, is a payment method that uses a debit card to transfer funds from a checking account to a merchant across a digital credit card... See More.
Smartphone Banking
Smartphone banking is the use of a smartphone or other cellular device to perform tasks such as monitoring account balances, transferring funds between accounts, bill payment and locating an ATM... See More.
Solvency
Solvency is a company’s ability to pay its debts as they become due. See More.
Sovereign Debt
Sovereign debt refers to the amount of money a country owes to the holders of its government bond. In the United States, sovereign debt is issued by the Department of Treasury and the bonds are... See More.
Structured Finance
Structured finance is a complex financial instrument offered to borrowers with unique and sophisticated needs. Generally, a simple loan will not suffice for the borrower so these more complex and... See More.
Subordinated Debt
Subordinated debt is any outstanding loan that, should the borrowing company fail, it will be repaid only after all other debt and loans have been settled. It is the opposite of unsubordinated... See More.
Traveler's Check
A traveler's check is a certified note issued by a bank that may be used by travelers as a risk-free substitute for paper currency. See More.
Unbanked
A person is unbanked when he or she does not participate in the banking system and relies on the use of cash rather than checks or credit cards. See More.
Underbanked
A person is underbanked when he or she does not participate in the banking system very much and instead relies on the use of cash rather than checks or credit cards. In the securities world,... See More.


Universal Banking
Universal banking refers to the practice of offering clients retail banking as well as investment services. See More.
Unsubordinated Debt
Unsubordinated debt refers to loans and debt securities (e.g., bonds, CDs, collateralized securities, etc.) for which the repayment priority outranks other debts owed by the same individual entity (... See More.
World Bank
The World Bank is an international financial institution dedicated to reducing poverty around the world through capital investment and the facilitation of trade. See More.
Z-Score
The Z-score is a financial statistic that measures the probability of bankruptcy.  See More.
Zero-Balance Account
A zero-balance account (or "ZBA") is a business-oriented bank account that usually has a balance of $0. See More.
Zombie Bank
A zombie bank is a bank with liabilities that exceed its assets (in other words, it has a net worth of zero). They do not die (hence the nickname) because they receive government support or bailouts... See More.

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