We first show that a negative relationship exists between bank size and the level of the Liquidity Ratio, confirming Prediction 1. Figure 5 compares the Liquidity Ratio for three asset size groups, as in the previous figures, the top 1%, top 2%–5%, and bottom 95%. Panel (a) reports the aggregate Liquidity Ratio, and panel (b) reports the median Liquidity Ratio. The graphs clearly show that larger banks have a lower Liquidity Ratio.