In: Finance
Which of the following statements regarding liability management is accurate? A. As a liability management strategy, reliance on customers deposits allows the bank's loan portfolio to grow faster than relying on borrowed funds. B. As a liability management strategy, reliance on borrowed funds allows a bank's loan portfolio to grow faster than relying on customers deposits . C. Customers deposits are more stable as a source funds for a bank than borrowed funds D. B and C.
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Customer deposits are more stable as source fund for banks than borrowed fund because consumer deposits are various types having prescribed term and they are always providing the bank with better management of their liquidity. These are also known as core deposits.
All the other options are false.
Correct answer will be option (C )customers deposits are more stable as a source fund for bank than borrowed fund