An FI's financing gap is the difference between an FI's:
A)average core deposits and average loans
B)average loans and average core deposits
C)assets and liabilities
D)liabilities and assets

Question

Quizplus · Accepted Answer

The financing gap is the difference between an FI's loans and deposits. This gap represents the amount of funding that an institution must obtain from external sources, such as the bond market, to finance its activities. A positive financing gap, where loans exceed deposits, is indicative of an institution that is dependent on external funding. Conversely, a negative financing gap, where deposits exceed loans, is indicative of an institution that has excess funds to lend to others.

An FI's Financing Gap Is the Difference Between an FI's