Capital, Liquidity, and Funding Ratios

Capital, liquidity, and funding ratios measure different parts of bank resilience: loss absorption, cash availability, stable funding, loan funding, and reserve-asset costs. This branch covers bank capital, liquidity versus capital, net stable funding ratio, loans-to-deposit ratio, and reserve asset cost.

Use these pages when a ratio or balance-sheet term changes solvency analysis, liquidity review, funding stability, lending capacity, or supervisory context.

What This Branch Covers

Decision Lens

Start by separating solvency from liquidity. A bank can be liquid but weakly capitalized, or well capitalized but under funding pressure; the ratio being used should match the risk being evaluated.

Evaluation Checklist

• Identify capital components, liquid assets, deposits, loans, wholesale funding, reserves, reporting period, and regulatory framework.
• Separate capital adequacy, liquidity coverage, stable funding, loan funding, and reserve cost.
• Check call reports, regulatory disclosures, audited statements, footnotes, liquidity reports, and supervisory materials.
• Review whether the ratio changes solvency, funding stability, lending capacity, deposit risk, or market confidence.
• Treat regulatory, accounting, investment, and supervisory conclusions as professional-advice areas.

Common Mistakes

• Using liquidity assets as a substitute for capital.
• Treating a single ratio as a complete bank-safety conclusion.
• Comparing ratios across jurisdictions without checking definitions.
• Ignoring off-balance-sheet commitments, deposit concentration, and funding maturity.

In this section

Choose a subsection first. Deeper term pages live inside each subsection, which keeps large topic hubs readable.