Banking and the Management of Financial Institutions - General Principles of Bank Management - Capital adequacy management
6 important questions on Banking and the Management of Financial Institutions - General Principles of Bank Management - Capital adequacy management
Why do banks have to make decisions about the amount of capital they need to hold?
2. The amount of capital affects return for the owners (equity holders) of the bank.
3. Regulatory requirement
How does Bank Capital Help to Prevent Bank Failure?
How to know id the bank is managed well?
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What is the return on assets?
What is the equity multiplier?
Pro's and cons of bank capital?
• Costly to owners of a bank because the higher the bank capital, the lower the return on equity
• Choice depends on the state of the economy and levels of confidence
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