Working Capital Management, Outline Example

Topic: How changes in bank`s ability to pay interest on corporate demand deposits will change cash management.

Body

• Regulation Q
• Prohibits the paying of interest on checking accounts
• Eliminates rate ceilings
• Banks and thrift institutions will charge borrowers higher interest rates
• Lenders will raise their lending rates as well as deposit costs
• Effects of deposit interest rate ceilings
• Growth of deposits at thrift institutions have slowed
• Fluctuations in the growth of deposits contributed to abrupt changes in the pace of residential construction activity
• Discriminates against less wealthy savers

Lifting Regulation Q: effects on banks

• Designed to help banks compete more effectively
• Banks have more options
• Companies which have implemented account analysis software
• Significantly alter calculations involved in verifying account analysis fees
• Both companies and banks will need to explore new banking alternatives and tax implications

Conclusion

The lifting of regulation Q will affect not only borrowers, but banking institutions as well as companies. Banks and companies will need to re-think their cash management as well as new banking alternatives due to the implications the lifting of Regulation Q may have on the market

Works Cited

Terry S. Maness and John T. Zietlow, Short-Term Financial Management, 3^rd ed. (South- Western College Pub, 2005).