Which of the following is a condition for a DI to be growing?
A)Net positive drain on deposits.
B)Peak of the net deposit drain probability distribution should lie at a point to the right of zero.
C)Average deposit drain such that new deposit funds more than offset deposit withdrawals.
D)The liability side of its balance sheet is decreasing.
E)Unused loan commitments is increasing.

Question

Quizplus · Accepted Answer

The condition for a DI to be growing is that the average deposit drain should be such that new deposit funds more than offset deposit withdrawals. This means that the bank is able to attract more deposits than it loses, leading to overall growth. Options A, B, D, and E are not correct as they either indicate a drain on deposits or do not provide information on deposit growth.

Which of the Following Is a Condition for a DI