Payday loan for less

Banks are usually funded with relatively liquid, short-term deposits which are lent out long term as loans. Loans are inherently illiquid. Companies and individuals rarely borrow unless they have a financing need. Banks face the risk that a large portion of their depositors will demand their funds back at the same time. Management has to determine the appropriate balance between holding low yield, but liquid, assets such as government securities that can be readily sold and higher yielding, but illiquid assets such as loans.