The CASA ratio is the proportion of deposits in current and savings accounts to overall deposits in a bank.
A higher CASA ratio indicates that a bank has more cheap cash.
This is because a bank’s interest rate on savings account deposits is smaller than the rate on other types of deposits.
Furthermore, the most of current accounts do not pay interest to account holders.
The bank will lend out more loans at a cheaper rate if it has more cheap money on hand.
A bank may have to rely on a more expensive source of funds if the CASA ratio is poor.
Information provided on this website is for Educational & Informational purposes only and is not considered to be advice or recommendation of any kind whatsoever. Anyone who wishes to apply the concept & ideas contained in this shall take full responsibility. Readers should always do their own diligence on any information perceived from this site to form their own opinion and best judgments. Any action you take upon the information you find on this website (letsthinkwise.com), is strictly at your own risk.