Using Exhibit 4, estimate which bank would have the lowest LC/TA ratio. Identify the two largest factors driving this result. (two answers)

Based on Exhibit 4, community banks like Harborview Savings contribute more to total US liquidity creation than money center banks because they hold a higher percentage of loans relative to total assets.

Which of the following are components of a lending technology as defined in the course material? (select all that apply)

Empirical research on a real-world bank run found that depositors living closer to bank branches withdrew earlier, confirming the Diamond-Dybvig prediction about the sequential service constraint. The same research found that depositors with longer banking relationships were significantly less likely to run. This second finding:

Harborview Savings Bank’s time deposits (CDs) represent 26.0% of total assets—nearly triple Summit Trust’s 9.0%. What does this difference reveal about their respective funding strategies?

In Exhibit 3, Pinnacle’s unused commitments fell from $36,000M (20.0% of TA) to $16,200M (9.0% of TA), a decline of $19,800M. But C&I loans increased by only $14,400M. What accounts for the $5,400M gap?

Northern Trust National (money center) has liquid assets at 38.0% of TA while Prairie State Bank (regional) holds only 22.5%. Given their different business models, which of the following best explains this gap?

The Liquidity Creation (LC) framework uses +1/2 weights for outputs and -1/2 weights for inputs. Which of the following items would receive a NEGATIVE weight in the LC calculation? (select all that apply)

In Exhibit 2, Panel B shows that Northern Trust National’s deposits grew by approximately 13% while Pinnacle’s deposits declined by 35% over the same period. What phenomenon does this divergence represent?

Qualitative Asset Transformation (QAT) describes how banks transform risky, illiquid, long-term assets into safe, liquid, short-term claims. Which of the following is an example of QAT?