---
entity_slug: bank_capital_structure
evaluator: null
evaluated_at: '2026-02-23T00:37:16.344905'
overall_score: 4.6
scores:
- name: definition_precision
  value: 4.0
  max_value: 5.0
  rationale: The definition clearly distinguishes between fixed capital (buildings,
    equipment) and circulating capital (reserves, loanable funds) within banks, establishing
    a precise structural relationship. The concept is well-bounded and non-circular,
    though it could be slightly more specific about what constitutes "loanable funds."
- name: source_grounding
  value: 5.0
  max_value: 5.0
  rationale: This entity is directly grounded in Smith's analysis in Book II, Chapter
    2, where he explicitly discusses how banks must balance their fixed and circulating
    capital portions. The relationship between smaller fixed capital and greater circulating
    capital availability is a core theme Smith develops in his banking analysis.
- name: domain_placement
  value: 5.0
  max_value: 5.0
  rationale: The "Accumulation" domain is perfectly appropriate since this concept
    deals with how banks structure and deploy their accumulated capital for productive
    use. Bank capital structure is fundamentally about capital formation and allocation,
    which is central to Smith's theory of accumulation.
- name: vsm_relevance
  value: 4.0
  max_value: 5.0
  rationale: This entity maps well to S1 (primary operations of lending) and S3 (internal
    regulation of capital ratios and stability). The balance between fixed and circulating
    capital directly affects both the bank's operational capacity and its internal
    regulatory mechanisms for maintaining stability.
- name: explanatory_value
  value: 5.0
  max_value: 5.0
  rationale: This entity illuminates a crucial structural mechanism in banking - how
    the internal composition of capital determines lending capacity and institutional
    stability. It explains the operational logic behind banking profitability and
    risk management rather than merely describing surface phenomena.
---

# Evaluation: Bank Capital Structure

## definition_precision — 4.0 / 5.0

The definition clearly distinguishes between fixed capital (buildings, equipment) and circulating capital (reserves, loanable funds) within banks, establishing a precise structural relationship. The concept is well-bounded and non-circular, though it could be slightly more specific about what constitutes "loanable funds."

## source_grounding — 5.0 / 5.0

This entity is directly grounded in Smith's analysis in Book II, Chapter 2, where he explicitly discusses how banks must balance their fixed and circulating capital portions. The relationship between smaller fixed capital and greater circulating capital availability is a core theme Smith develops in his banking analysis.

## domain_placement — 5.0 / 5.0

The "Accumulation" domain is perfectly appropriate since this concept deals with how banks structure and deploy their accumulated capital for productive use. Bank capital structure is fundamentally about capital formation and allocation, which is central to Smith's theory of accumulation.

## vsm_relevance — 4.0 / 5.0

This entity maps well to S1 (primary operations of lending) and S3 (internal regulation of capital ratios and stability). The balance between fixed and circulating capital directly affects both the bank's operational capacity and its internal regulatory mechanisms for maintaining stability.

## explanatory_value — 5.0 / 5.0

This entity illuminates a crucial structural mechanism in banking - how the internal composition of capital determines lending capacity and institutional stability. It explains the operational logic behind banking profitability and risk management rather than merely describing surface phenomena.
