Explain why non-transactions accounts have become a more important source of funds for the bank than transaction accounts over the past thirty years?
What will be an ideal response?
Non-transactions accounts include savings and time deposits, and certificates of deposit. Over the past quarter of a century financial innovation and technology have caused people to economize on their deposits in transaction accounts (checkable deposits) since most of these accounts paid little to no interest. The development of money market accounts and the technology that has allowed people to transfer funds out of savings accounts when their checking account balances run low has caused the balances in the savings accounts to increase significantly.
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