Question
Asked Jun 11, 2019
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In three sentences or less, describe the difference between an illiquid commercial bank and an insolvent commercial bank.

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Expert Answer

An illiquid commercial bank means she does not have resources available to meet her current obligation, where as an insolvent commercial bank means she owes more than she own.

Therefore in business model of banks illiquid commercial bank is more risky for the creditors as they do not have the option of redeeming their claims for cash on demand or at...

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