# 20 Resources That’ll Make You Better at liquidity coverage ratio formula

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Liquidity Coverage Ratio (LCR) is a new and recently published formula for determining the creditworthiness of a borrower. The formula is based on the creditworthiness factors and the risk to the borrower. The higher the LCR, the more liquid the borrower is, and the more stable the borrower’s credit standing. The LCR is a percentage, and the formula is an equation.

Essentially, the creditworthiness of a borrower is based on the amount of money borrowed over a given period of time, the amount borrowed on a given day, and the number of days the borrower has to pay back the loan. The formula then determines how much of the borrower’s income is tied up in the loan. The higher the LCR, the more liquid that borrower is.

The formula works to both sides of the equation. A borrower with an LCR of 0.5 is considered “liquid” because they have enough money on hand to pay back their loan if they start repaying it right away. In contrast, a borrower with a negative LCR is considered “unliquid” because they have to take a hit to make it pay back the loan.

As a simple example, let’s say that someone with an LCR of 0.50 is a good risk and someone with an LCR of -0.25 is a bad risk. The loan they took out is \$100,000 and they are repaying it immediately. The LCR of a borrower is usually described as a measure of how liquid they are.

By definition, liquidity is the ability to make a loan. Most loans are not liquid, and therefore loans are said to be “unliquid”. This is not a new concept; the idea was first introduced by John Maynard Keynes in his 1936 essay “The General Theory of Employment, Interest, and Money”. Keynes argued that the amount of money a nation has is not the same as the money it has to put out in loans.

Keynes argued that the amount of money a nation has is not the same as the money it has to put out in loans. For example, a country with a \$1.5 million dollar GDP and a \$10 million dollar LCR might have \$6 million to put out in loans. But because the \$10 million USD LCR is so big, this isn’t equivalent to a \$1.5 million dollar GDP. This is why liquidity coverage ratio is so important.

This is an excellent illustration of why you should have a very low LCR to start with. LCR is a ratio of the money a country can put out in loans to the money it has to put out in loans to borrow. For example, if you have a 1.

percent interest rate on loans, you can borrow 100 million USD for a 10 million USD LCR. But because the interest rate is so low, you have to put 100 million USD into loans to put out 10 million USD.

If you’re going to borrow money to buy a house, your interest rate is going to have to be very low to get the same return on your money. If it’s low you have to put in more money to borrow, and you have to put in more money to buy the house you’re trying to buy to close that gap.