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The paper discusses how banks make decisions to enhance their profitability within the limits which the Central Bank imposes and in view of the behaviour of money and credit markets. It provides a survey of commercial bank earnings since the Central Bank of Barbados became operational in 1973. It evaluates the markets for deposits and credit by estimating the demand functions for them. It discusses the trends and relative movements in loan and deposit interest rates and simulates commercial bank interest rate policy based on the position at the end of 1983.