OFFSET Definition

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OFFSET is: a. In banking, the deduction by a debtor from a claim or demand of a debt or obligation. Such an offset is based upon a counterclaim against the party making the original claim. Example: Seller makes a claim or files a lawsuit asking for $20,000 from Debtor as the final payment in purchase of a restaurant; as part of his defense Debtor claims an offset of $10,000 for alleged funds owed by Seller for repairs Debtor made on property owned by Seller, thus reducing the claim of Seller to $10,000; b. in accounting, the amount equaling or counterbalancing another amount on the opposite side of the same ledger or the ledger of another account; c. in securities, the elimination of a long or short position by making an opposite transaction. See also OFFSET ACCOUNT.

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RISK ANALYSIS is an analysis of the possibility of suffering loss.

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.

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