Bank Risks] Banks sometimes issue large, mark etable certificates of depositswhen other deposits declin e. The chart below exhibits the ratio of large time deposits to thetotal deposits in commercial banking industry in the US from 1995 to 2008. As you cano bserve, large time deposits had become increasingly important source of funds for banks.Note that a time deposit is an in terest-bearing bank deposit wi th a specified period of maturity.It is a mon ey deposit at a banking in stitution that cannot be withdrawn for a specific termor period of time.FRED - Large Time Deposits, Al Commercial Banks/Deposits, Al Commercial Bariks0.320.300.280.260.240.220200.18a160140.121996199820002002200420062008Source Board of Governors of the Federal Reserve System (US)mytredig/F2kVWhat type of bank risk(s) (Liqui dity risk, credit risk, interest-rate risk, trading risk) doesmore likely account for this increase in large time dep osits and why?B. of U.S. S/BIl. of U.S. S

Liquidity risk is more likely to account in large time deposits because due to the people investment…

Answered: What type of bank risk(s) (Liqui dity…

What type of bank risk(s) (Liqui dity risk, credit risk, interest-rate risk, trading risk) does more likely account for this increase in large time dep osits and why?

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter13: Capital, Interest, Entrepreneurship, And Corporate Finance

Section: Chapter Questions

Problem 4.8P

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Question

Bank Risks] Banks sometimes issue large, mark etable certificates of deposits
when other deposits declin e. The chart below exhibits the ratio of large time deposits to the
total deposits in commercial banking industry in the US from 1995 to 2008. As you can
o bserve, large time deposits had become increasingly important source of funds for banks.
Note that a time deposit is an in terest-bearing bank deposit wi th a specified period of maturity.
It is a mon ey deposit at a banking in stitution that cannot be withdrawn for a specific term
or period of time.
FRED - Large Time Deposits, Al Commercial Banks/Deposits, Al Commercial Bariks
0.32
0.30
0.28
0.26
0.24
0.22
020
0.18
a16
014
0.12
1996
1998
2000
2002
2004
2006
2008
Source Board of Governors of the Federal Reserve System (US)
mytredig/F2kV
What type of bank risk(s) (Liqui dity risk, credit risk, interest-rate risk, trading risk) does
more likely account for this increase in large time dep osits and why?
B. of U.S. S/BIl. of U.S. S

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