ACCOUNTING TERMS - ACCOUNTING DICTIONARY - ACCOUNTING GLOSSARY
From the web's #1 provider of financial analysis / ratio analysis
GOVERNMENT PROVISION OF DEPOSIT INSURANCE Definition
GOVERNMENT PROVISION OF DEPOSIT INSURANCE affects banks' demands for deposits and households' (and others') supply of deposits to banks. The banking industry models deposit insurance premiums that banks pay as a fixed share of deposits. As is the case for many government subsidies, the government subsidies attributable to the under-pricing of deposit insurance are likely to be shared with depositors (and bank customers more generally) because that subsidy lowers the cost of providing that insurance. In response to the subsidy, banks raise the deposit interest rates that they pay. In doing so, banks transfer some of the government subsidy to depositors.
Learn new Accounting Terms
TAXABLE INCOME is that income that is reported to the government for the purposes of calculating income taxes. Taxable income normally is not aligned with the financial income reported within financial statements. See FINANCIAL INCOME.
SEPARABLE COSTS are all costs (manufacturing, marketing, distribution, etc.) incurred beyond the split-off point that are assignable to one or more individual products.