Question

pros and cons of excess reserve accumulation

pros and cons of excess reserve accumulation
0 0
Add a comment Improve this question Transcribed image text
Answer #1

Excess reserve can be beneficial for -

1.Excess reserves are a safety buffer of sorts. Financial firms that carry excess reserves have an extra measure of safety in the event of sudden loan loss or significant cash withdrawals by customers.

2.This buffer increases the safety of the banking system, especially in times of economic uncertainty.

3.Excess Reserves can help in providing excess liquidity to a firm.

Cons of Excess reserve

1.Loss of opportunity as company is not able to deploy the excess money.

2. Return on investment is comapratively lesser as firm is not deploying excess money.

Add a comment
Know the answer?
Add Answer to:
pros and cons of excess reserve accumulation
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT