Why Other Banks Offer Higher Interest - A Lesson in Banking & Risk

Day 680, 21:10 • Published in USA USA • by t'jelle Bank

A few citizens out there in eRepublik might be wondering why t'jelle Bank would offer lower interest rates than other banks. It seems weird sometimes that the largest bank wouldn't offer the largest interest rates. I decided to give a little crash course in banking that would help clear some of the fog surrounding t'jelle Bank decisions.

It makes sense for other banks to offer higher interest rates than we do. Let's think about why for a second. t'jelle Bank has been around for 5 months, is run by a well known politician, has large reserves and an efficient interface for handling banking interactions. In other words: we are established and secure. We are less likely to collapse and if we do - we have the assets to back everything up.

The banks that are offering higher interest rates? They have been around for usually under a month and very few make it past a month. They have very small reserves, and are usually run by unknown citizens with little experience or knowledge about banking. Therefore, since their bank is riskier, they have to raise interest rates in order to remain competitive in the banking market. Since we lowered our interest rates, not even 2% of our depositors have left. We have lost a few depositors, but a vast majority recognize the benefit of being a part of the largest and most secure bank in eRepublik.

So t'jelle Bank offering 5% monthly is almost the same value as another bank offering 10%. After a while you have to wonder not why t'jelle is offering 5%, but why others are offering 10%.

Remember, if you have any questions about t'jelle Bank and its operations, feel free to send us an email.

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