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Consider the following balance sheet for Midtown Bank (Reserve Requirement = 10 percent) Asset Liability Reserve: 9 million (required) Deposit: 90 million Loan: 50 million

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Consider the following balance sheet for Midtown Bank (Reserve Requirement = 10 percent) Asset Liability Reserve: 9 million (required) Deposit: 90 million Loan: 50 million Securities: 30 million Other Assets: 11 million Bank Capital: 10 million Suppose there is a deposit outflow of 9 million, what type of crisis do you think the bank is facing? and why? Explain your answer. Please make sure your answer has the detailed discussion on the changes the balance sheet of the bank. (3+3+4=10 points). Consider the following balance sheet for Midtown Bank (Reserve Requirement = 10 percent) Asset Liability Reserve: 9 million (required) Deposit: 90 million Loan: 50 million Securities: 30 million Other Assets: 11 million Bank Capital: 10 million Suppose there is a deposit outflow of 9 million, what type of crisis do you think the bank is facing? and why? Explain your answer. Please make sure your answer has the detailed discussion on the changes the balance sheet of the bank. (3+3+4=10 points)

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