If the loans/deposits ratio is relatively high for a bank, this implies an emphasis on:
A) securities to finance loans
B) nondeposit sources of funds to finance loans
C) decreasing the quantity of loans outstanding
D) decreasing excess cash reserves

Question

Quizplus · Accepted Answer

A relatively high loans/deposits ratio suggests that a bank is utilizing a significant portion of its deposits for lending purposes. When deposits are not sufficient to meet lending needs, the bank may turn to nondeposit sources of funds, such as borrowing from other financial institutions or issuing debt, to finance additional loans.

If the Loans/deposits Ratio Is Relatively High for a Bank