Bank Failure - loans will be lower than the value of the...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Bank Failure Suppose a deposit outflow of $20m occurs and the bank, then, sells its $10m in securities. The bank will try to call in loans and sell loans to meet its required reserves. The proceeds from the sale of the
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: loans will be lower than the value of the loans. The loss may be greater than the amount of bank capital. The bank's assets are smaller than its liabilities. The bank is insolvent....
View Full Document

This note was uploaded on 11/22/2011 for the course FIN FIN1100 taught by Professor Bradrifkin during the Fall '09 term at Broward College.

Ask a homework question - tutors are online