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UBL Bank currently has PKR 4600 million in transaction deposits on its balance sheet. The State Bank of Pakistan has currently set the reserve requirement at 10 percent of transaction deposits. If the State bank decreases the reserve requirement to 8 percent, reflect the result of this transaction on the balance sheet of UBL and effect of this change on its balance sheet

Respuesta :

Answer:

Total Assets = 4600    ,Total Liabilities = 4,600

Explanation:

Given:

Deposits = 4,600 million

Reserve requirement = 10% of deposits

Computation:

Reserve requirement = 10% x 4,600 million

Reserve requirement = 460 million

Total Assets = Reserves + Outstanding Loan

Outstanding Loan  = Deposits - Reserve requirement

Outstanding Loan  = 4,600 million - 460 million

Outstanding Loan  = 4,140 million

Balance sheet:

Assets:                                  Liabilities:

Reserves 460               Deposits         4,600

Loans         4140

Total Assets 4600            Total Liabilities 4,600

Reserve requirement = 8%

Reserves requirement = 8% x 4,600

requirement = 368 million

Outstanding  Loans = 4,600 - 368

Outstanding = 4,232  million

New Balance sheet:

Assets:                                  Liabilities:

Reserves 368               Deposits         4,600

Loans         4,232  

Total Assets 4600            Total Liabilities 4,600

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