How do Basel III liquidity metrics influence lending decisions for banks?

• A. Basel III metrics focus only on consumer loans.
• B. Basel III metrics require a complete elimination of illiquid assets.
• C. Basel III liquidity metrics focus on short-term funding only.
• D. Liquidity Coverage Ratio and Net Stable Funding Ratio affect capacity to fund illiquid assets; banks may price in liquidity costs and limit long-tenor or illiquid loans.

Answer: (D)