Banking Fellowship Notes (Part 1) - Principles of Banking

I thought it might be useful to share my note to those who are interested in banking, or for those who are also writing their fellowship in banking during May 2020. My notes are going to be based heavily on "The Principles of Banking" by Moorad Choudhry.

So Part 1 will be on the principles of banking from "The Principles of Banking".

There are four main principles:

1. Ensure you have enough liquidity for all the bank's contingencies, before lending beyond the deposit base.
2. Ensure the funds lent out are predominantly on core and stable deposits, i.e. sound customer deposit base.
3. Lend prudently with sound judgment, and if necessary across a diverse range of customers (but only to those customers within your areas of expertise
4. Maintain a strong equity capital base that allows the bank to remain going concern after absorbing losses and unexpected losses.

To summarise: Secure and Stable Liquidity, Lending "Correctly" and Keeping Enough Equity Capital

I think starting with Principles are great because one can root his/her studies on these principles, rather than random snippets of facts to remember. And things tend to make sense if you break it down into first principles.