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following is the question Question 4 The following balance sheet shows the combined assets and liabilities of Australia's four major banks at March 2017. (Figures

following is the question

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Question 4 The following balance sheet shows the combined assets and liabilities of Australia's four major banks at March 2017. (Figures don't quite add-up due to rounding errors.) Numbers in brackets (.) are a component of the above total figure. Assets and Liabilities of Australia's Four Major Banks (end-March 2017) Assets $ billion Liabilities $ billion Currency & Liquid Assets 290 Deposits 2,1 14 - At-Call (1,102) Securities 427 Borrowing - Short-term 214 - Long-term 524 Loans and Advances 2,442 - Housing (1,551) Other 313 Other 390 Total Assets 3,472 Total Liabilities 3,244 Shareholder Equity 228 (a) Calculate the leverage ratio for the major banks. (b) What is the role played by shareholder equity (or bank capital) if a large fall in house prices reduces the value the banks' housing assets by $50 billion? (c) Assume that Currency & Liquid Assets are effectively bank reserves. What is the reserve to deposit ratio of the major banks? (d) Suppose the four major banks were subject to a bank run. How would this affect the above balance sheet? (e) What mechanisms are in place that act to reduce the probably of a bank run occurring in Australia

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