Interest = principal × interest rate × deposit period.

According to the different nature of banking business, it can be divided into bank interest receivable and bank interest payable.

Interest receivable refers to the remuneration that the bank obtains from the borrower by lending to the borrower; It is the price that the borrower must pay for using the funds.

Interest payable refers to the remuneration paid to depositors by banks to absorb their deposits; It is the price that banks must pay to absorb deposits, and it is also part of the cost of banks.

Extended data

Generation factor

1, delayed consumption

Lenders lend money, which is equivalent to delaying the consumption of consumer goods. According to the principle of time preference, consumers will prefer current goods to future goods, so there will be positive interest rates in the free market.

2. Expected inflation

Inflation will occur in most economies, representing a certain amount of money, and fewer goods can be purchased in the future than now. So the borrower needs to compensate the lender for the losses during this period.