Passive Interest Rate Concept

Passive Interest Rate designates an interest rate that banks pay for the loans that obtain in the market, whose can be represented by demand deposits, term deposits, bonds, other institutions’ credits or other products of similar characteristics. It’s designated by passive because focuses over the banks Passive accounts.

The bigger the difference between this rate and the interest rate received from the credits given (active interest rate), bigger the bank profit in its activity of financial intermediation.

 

 

Translated from Portuguese by Susana Saraiva, Portuguese-English and English-Portuguese translation specialist. Contact: spams@sapo.pt.