Quiz – Matching Liquidity Ratios of Banks
Understanding the key drivers of liquidity is critical to analysing a bank of any financial institution. A bank’s access to liquidity is important in the daily running of the business and can become vital in terms of crises, either in terms of the individual bank or during a sector wide banking crisis (as have been experienced in Russia, Turkey, Argentina, Ireland and Greece amongst others). A bank’s access to liquidity is particularly important for investment banks due to the fact that they have no access to stable customer deposits as a form of funding. This quiz is designed to demonstrate the differences, which can arise in the liquidity ratios between difference financial institutions and different countries.
Click to learn more about Analyse Performance of Commercial Banks.
Please match the institution with the ratio and give an explanation as to your results.
|Liquid Assets* / Total Assets||Loans / Deposits||Customer Deposits / Total Assets||Bank (1, 2, 3, 4, 5)|
*Liquid assets = cash and cash equivalents, reverse repos and Fed Funds and government securities
- Wells Fargo: AA-rated US retail bank
- Goldman Sachs: US investment bank with very small commercial banking subsidiary
- Rothschild Bank: Swiss private bank, with business focussed on high net worth individuals
- Bank of India: 4th largest bank in India (state owned) with dominant position in deposit market
- BBVA: Spanish Bank operating in both retail and wholesale markets on a global basis
Here is the answer of this quiz.