Banks tend to attract short term deposits and they often lend for longer periods of time. As a result, a commercial bank may not be able to repay all of those deposits if savers decide to withdraw their funds. This is called liquidity risk. To reduce liquidity risk banks will try to attract longer term deposits and also hold some liquid assets as capital reserves.
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A Level Economics Grade Booster Workshops
Our A Level Economics Grade Booster workshops are designed to provide essential revision support to all A Level Economics students as they complete their preparation for the three terminal papers...
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