In a large depositor concentration, the term “large” refers to someone that deposits a deposit of 5% of total liabilities.

A is incorrect: Someone that owns most shares is not referred to as “large” in deposit concentration B is incorrect: Large deposit concentration is defined in terms of deposits, not withdrawals

Things to Remember

• Depositor concentration refers to the situation where a significant portion of a financial institution's deposits are held by a small number of depositors.
• Large depositor concentrations can pose risks to the financial institution, especially if one or a few large depositors decide to withdraw their funds.
• Regulatory authorities often monitor depositor concentration levels to ensure the stability of financial institutions.
• Financial institutions may use depositor concentration reports to assess their risk exposure and develop strategies to manage concentration risks.