BROWSE

Call Money

Definition

Call money is minimum 5% short-term finance repayable on demand, with a maturity period of one to fourteen days or overnight to fortnight. It is used for inter-bank transactions. The money that is lent for one day in this market is known as "call money" and, if it exceeds one day, is referred to as "notice money."

What is 'Call Money'

Call money is money loaned by a bank that must be repaid on demand. Unlike a term loan, which has a set maturity and payment schedule, call money does not have to follow a fixed schedule. Brokerages use call money as a short-term source of funding to cover margin accounts or the purchase of securities. The funds can be obtained quickly.

Explaining 'Call Money'

Brokerages know that they are taking on risk by using funds that can be called at any time, so they typically use call money for transactions that will be resolved quickly. If the bank recalls the funds then the broker can issue a margin call on its clients in order to make the repayment. The call money rate is used as the interest rate on the loans.


Further Reading


Financial liberalization and money demand in the ASEAN countries
onlinelibrary.wiley.com [PDF]
… Correspondence to: Department of Economics, University of … McCallum and Goodfriend (1992) add that in empirical appli- cations, since economic actors other than house- holds … Log of real GDP; TIME, time deposit rate; RET, broad money return; CMR, call money or other …

The interrelations of finance and economics: Theoretical perspectivesThe interrelations of finance and economics: Theoretical perspectives
www.jstor.org [PDF]
… Correspondence to: Department of Economics, University of … McCallum and Goodfriend (1992) add that in empirical appli- cations, since economic actors other than house- holds … Log of real GDP; TIME, time deposit rate; RET, broad money return; CMR, call money or other …

What do we call money? An appraisal of the money or non-money viewWhat do we call money? An appraisal of the money or non-money view
www.cambridge.org [PDF]
… Correspondence to: Department of Economics, University of … McCallum and Goodfriend (1992) add that in empirical appli- cations, since economic actors other than house- holds … Log of real GDP; TIME, time deposit rate; RET, broad money return; CMR, call money or other …

Inter-bank call money market transaction in IndonesiaInter-bank call money market transaction in Indonesia
journal.uii.ac.id [PDF]
… Correspondence to: Department of Economics, University of … McCallum and Goodfriend (1992) add that in empirical appli- cations, since economic actors other than house- holds … Log of real GDP; TIME, time deposit rate; RET, broad money return; CMR, call money or other …

Tests of the Black-Scholes and Cox call option valuation modelsTests of the Black-Scholes and Cox call option valuation models
www.jstor.org [PDF]
… Correspondence to: Department of Economics, University of … McCallum and Goodfriend (1992) add that in empirical appli- cations, since economic actors other than house- holds … Log of real GDP; TIME, time deposit rate; RET, broad money return; CMR, call money or other …

Financial changes and interest elasticity of money demand: Further tests of the Gurley and Shaw thesisFinancial changes and interest elasticity of money demand: Further tests of the Gurley and Shaw thesis
www.tandfonline.com [PDF]
… Correspondence to: Department of Economics, University of … McCallum and Goodfriend (1992) add that in empirical appli- cations, since economic actors other than house- holds … Log of real GDP; TIME, time deposit rate; RET, broad money return; CMR, call money or other …

11 Islamic money market instruments11 Islamic money market instruments
books.google.com [PDF]
… Correspondence to: Department of Economics, University of … McCallum and Goodfriend (1992) add that in empirical appli- cations, since economic actors other than house- holds … Log of real GDP; TIME, time deposit rate; RET, broad money return; CMR, call money or other …



Q&A About Call Money


What are some transactions that brokerages typically use call money for?

Brokerages typically use call money for transactions that will be resolved quickly. If the bank recalls the funds then the brokerage can issue a margin call on its clients in order to make the repayment.

What does the term usually refer to in the international market?

The term usually refers to the short term financing by banking institutions to brokers for maintaining the margin account. It is different from the term "loan" as the schedule for payment of interest and principal are not fixed. Since, loan can be called at any time, it is riskier than other forms of loans.

Who uses call money?

Brokerages use call money as a short-term source of funding to cover margin accounts or the purchase of securities.

Why do brokerages know they are taking on risk by using funds that can be called at any time?

Brokerages know they are taking on risk by using funds that can be called at any time, so they typically use these funds for transactions that will be resolved quickly. If the bank recalls the funds then the brokerage can issue a margin call on its clients in order to make repayment.

How does the call money rate differ from other interest rates?

The call money rate differs from other interest rates because it can be recalled at any time.

What is Call Money?

Call money is a minimum short-term repayable on demand, with a maturity period of one to fourteen days or overnight to a fortnight. It is used for inter-bank transactions. The money that is lent for one day in this market is known as "call money" and, if it exceeds one day, is referred to as "notice money."

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