Why Do Banks Typically Not Use All of Their Deposit

question 53

Essay

Why do banks typically not use all of their deposit creation potential?

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Definitions:

Distinctiveness

Refers to how much an object or person stands out as compared to others in the same category or environment.

Consistency

The quality of achieving a level of performance which does not vary greatly in quality over time.

Frequency

In general terms, the rate at which something occurs over a particular period of time or in a given sample.

Actor-observer Bias

A cognitive bias that affects the way we attribute causes to our own behaviors versus those of others, often attributing our own actions to situational factors while attributing others' actions to their personality or character.