Liquidity and Profitability:
To become in a position to satisfy needs for money as when these are typically produced bank should never just organize to own cash that is sufficient however it should also circulate its assets in a way that a few of them could be easily changed into cash.
Hence, the bank’s cash reserves can quickly be reinforced in the big event of hefty drawings to them. Assets that are easily convertible into money are known as fluid assets, the absolute most fluid being money it self. The shorter the size of that loan the greater amount of fluid since it will quickly grow and get repayable in money; the less profitable because, other stuff being equal the interest differs straight aided by the loss in liquidity skilled by the loan provider. Lees verder