demand-deposit

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aaron792

Senior Member
Chinese
In our textbook:
Apart from usual business cycles, some types of organizations have unique requirements. Financial institutions, for example, have demand-deposit and installment-loan cycle that relate to transactions involving customer accounts and loans, respectively.

I have no problem with words demand and deposit. But what does demand -deposit cycle mean?
Thanks in advance!
 
  • envie de voyager

    Senior Member
    english-canadian
    Deposit refers to people putting money into the bank, and demand refers to people taking money out of the bank. So, the demand-deposit cycle is the regular, predictable pattern of money coming into and going out of the bank.

    Many people receive their wages from their jobs every Friday, so a lot of money is deposited into the bank on Fridays. Then, over the following week, people take this money out of the bank to pay for things. The amount of money in the bank would peak on Fridays and then slowly drop until the next Friday. This is an example of a demand-deposit cycle.
     
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