Author: Anonymous

In Exhibit 2, Panel F shows that 92% of Pinnacle’s deposits were uninsured at the start of the period. Using the Diamond-Dybvig framework, why does this concentration of uninsured deposits make the observed deposit run more predictable?

Using Exhibit 1, which single action would most effectively increase Harborview’s LC/TA ratio?

In 1983, when Diamond and Dybvig published their model, a bank run unfolded over days or weeks as depositors physically lined up at branches. In 2023, a $209 billion bank lost $42 billion in deposits in a single day through mobile banking, coordinated by social media. How does this technological change affect the model’s policy implications?

A bank simultaneously issues a $10 million loan to a business and creates a $10 million deposit in the borrower’s checking account. According to the Distinct Value Model, which statement is correct?

Using Exhibit 3, calculate the approximate change in Pinnacle’s total liquidity creation between Q1Y1 and Q3Y2. Consider asset-side, liability-side, and off-balance-sheet components. Which statement best describes the net effect?

Based on Exhibit 4, community banks like Harborview Savings contribute more to total US liquidity creation than money center banks because they hold a higher percentage of loans relative to total assets.

Bayshore Community Bank ($550M) shows the mildest deterioration across all six panels of Exhibit 2 despite being the smallest bank. Which characteristics of its balance sheet profile most likely explain its resilience? (select all that apply)

Summit Trust Bank (superregional) has a securities portfolio of 21.0% of TA and time deposits of 9.0%, while Harborview has securities at 16.0% and time deposits at 26.0%. If interest rates rose significantly, which bank faces greater net interest margin compression and why?

Which of the following correctly describes the four competitive advantages that give banks their distinct value? (select all that apply)

In Exhibit 2, Panel B shows that Northern Trust National’s deposits grew by approximately 13% while Pinnacle’s deposits declined by 35% over the same period. What phenomenon does this divergence represent?