Suppose that a bank estimates its total deposits for the next four months in millions of...

Suppose that a bank estimates its total deposits for the next four months in millions of dollars to be, respectively, $112, $132, $121, and $147, while its loans (also in millions of dollars) will total an estimated $87, $95, $102, and $113, respectively, over the same four months.

Under the sources and uses of funds approach, when does this bank face liquidity deficits, if any?

Expert Solution

Month	Source of liquidity (Deposits)	Uses of liquidity (Loans)	Deposits - Loans
1	112	87	25
2	132	95	37
3	121	102	19
4	147	113	34

As can be seen from the above table, the bank has surplus liquidity for the next four months. It does not face any liquidity deficits.

jeff jeffy answered 1 year ago

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Suppose that a bank estimates its total deposits for the next four months in millions of...

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