The business of banking is essentially a trade-off between liquidity and profitability.

Question

Quizplus · Accepted Answer

The business of banking involves managing the balance between providing customers with liquidity (access to their funds) and generating profitability for the bank. Banks want to make money by lending out funds, but they also need to ensure they have enough liquidity to meet customer demand for withdrawals or other transactions. This balance can be challenging to achieve, and banks must carefully manage their assets and liabilities to find the right mix of liquidity and profitability.

The Business of Banking Is Essentially a Trade-Off Between Liquidity