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Commercial banks, just like all other plants, need nutrition to survive. Water is a good way of providing commercial banks with the vitamins they need.

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12y ago

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What mechanism is used by commercial banks for providing credit to government?

statutory liquidity ratio


How can you control the liquidity in system with CRR?

With Cash Reserve Ratio the Commercial Banks can keep money in Central Bank. So that amount of money keeps intact coz the commercial bank do not retain that with themselves. So if in a case the commercial banks need money they can easily opt for the aforesaid invested money with central bank.


What has the author Douglas W Diamond written?

Douglas W. Diamond has written: 'Liquidity shortages and banking crises' -- subject(s): Bank failures, Bank liquidity, Banks and banking, Central, Central Banks and banking 'Liquidity, banks, and markets' -- subject(s): Econometric models, Bank liquidity, Money market, Liquidity (Economics) 'Illiquid banks, financial stability, and interest rate policy'


Can you think of 3 reasons why we need commercial banks?

Commercial banks play a crucial role in the economy by providing essential financial services. First, they facilitate savings and investments by offering interest-bearing accounts and loans to individuals and businesses. Second, they provide a secure and efficient payment system that enables transactions and facilitates trade. Lastly, commercial banks contribute to economic stability by managing monetary policy and providing liquidity to the financial system.


How do banks identify liquidity risk?

Frequent borrowings from other institutions, Excess of outflows over inflows, negative liquidity gaps.


How many scheduled commercial banks in Bangladesh?

Total number of private commercial banks is 36 including 8 Islamic commercial banks. And there are 9 foreign commercial banks in Bangladesh.


Why do banks need to manage liquidity risk?

Because there is no telling how many customers would want to withdraw their money from their bank accounts on any given day. Banks use the deposit money to lend loans and makes a profit. If they lend too many loans, they may not have money to meet withdrawal demands. So banks have to maintain their liquidity position in a strong way.


How do banks achieve a balance between profitability and liquidity?

fully discription of ii


Commercial banks and their relationship with the reserve bank?

we take/borrow money from the commercial banks and the commercial banks take/borrow money from the reserve bank


Are Liquidity Ratios the higher the better?

No. High liquidity ratios may affect the amount of capital that can be invested/used to earn. Let us say in banks, if we increase the liquidity ratio by 10% the bank would have to reduce lending by that 10% to bridge the gap. which in turn would severely affect the banks earnings.


What in the world of finance are the three types of liquidity shortages?

Major types of liquidity fall into three major categories: 1. Shortages in central bank liquidity; 2. Specific commercial bank liquidities; 3. Shortages in financial market liquidity.


What is Oxford was started to fill a need that commercial banks were overlooking?

individuals who wanted to buy a home