Question

"Liquidity gap" is the difference between a financial institution's assets and liabilities, caused by assets and liabilities not sharing the same liquidity properties.

a. True
b. False

Answer 1

False

Step-by-step explanation:

Liquidity gap is the shortage of funds that a firm experiences due to the difference in the supply and demand of the assets and liabilities and also due to differences in the maturity of the assets and liabilities . When there will be an excess demand for funds, this will create a shortage and hence there will exist a liquidity gap.