Volatile liabilities Purchased funds from rate-sensitive investors They will move their funds If other institutions pay higher rates If it is rumored that the bank has financial difficulties With more such liabilities (34%v.s.15%), larger banks are paying market rates on a greater proportion,with less customer loyalty and thus greater liquidity risk. 猫行贺影小号Volatile liabilities Volatile liabilities † Purchased funds from rate-sensitive investors † They will move their funds „ If other institutions pay higher rates „ If it is rumored that the bank has financial difficulties † With more such liabilities (34% v.s. 15%), larger banks are paying market rates on a greater proportion, with less customer loyalty and thus greater liquidity risk