How Do Banks Create Liquidity

question 12

Essay

How do banks create liquidity?

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Definitions:

Exchange Relationship

Interaction between two parties involving the provision of goods, services, or sentiments in return for something of value.

LMX

Leadership-Member Exchange, a theory focusing on the dyadic relationships between leaders and followers, influencing many outcomes in the organizational context.

Social Exchange Theory

A theoretical framework suggesting that social behavior is the result of an exchange process aiming to maximize benefits and minimize costs.

LMX Differentiation

The degree to which leaders in the Leader-Member Exchange (LMX) theory develop different quality relationships with different subordinates.