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# Bank Capital Structure

## Definition

The division of a bank's capital into fixed capital (buildings, equipment) and circulating capital (reserves, loanable funds). This structure determines a bank's ability to lend and maintain stability.

## Source Chapter

Book II, Chapter 2

## Context

Smith analyses how banks must balance their fixed and circulating capital, explaining that the smaller the fixed capital portion, the greater the circulating capital available for loans. He shows how this affects a bank's profitability and stability.

## Economic Domain

Accumulation

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