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 drains 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

A DI can only grow if new deposit funds offset deposit withdrawals or if it is able to attract new customers or increase its share of the market. Therefore, option C, which states that average deposit drains should be offset by new deposit funds, is the condition for a DI to be growing. Options A, B, D, and E do not necessarily indicate growth or decline of a DI.

Which of the Following Is a Condition for a DI