Deposits are the basis of banking business through which banks make their investments in all areas, do you think the decline in deposits affect the ability of banks to grant credit?
If you prepare these large deposits ,, you will collect a large amount ..and positively affect the bank credit
Surly yes, like these effects won't need further study. Classic relations in banking Processes already intensively studied before. My regards
If you prepare these large deposits ,, you will collect a large amount ..and positively affect the bank credit
Hi,
Certainly yes. A decrease in the deposits would affect bank credits.
Dear Colleagues and Friends from RG, Pursuant to the principles of functioning of classic deposit and credit banking, a significant reduction in the value of clients' deposits for money deposits to banks could increase the liquidity risk in the bank's finances and also the risk of bankruptcy if the decrease in deposits would not be supplemented by the loan of missing financial capital on the inter-bank market or in the bank central. The liquidity risk in terms of balancing liabilities and assets in the commercial bank's liabilities and assets management process most often arises when depositors withdraw money from deposits and deposits at the same time before their maturity. This situation occurs when another bank declares bankruptcy and a banking crisis begins or when a specific bank announces to the media that it has serious financial problems. Usually this type of situation arises when serious mistakes were made in the credit risk management process or if the bank managers have embezzled financial problems and when the liquidity risk is raised in the balance sheet and the bank, fearing restrictions, does not request financial assistance from the central bank and is forced to declare bankruptcy. However, this type of situation looks slightly different in investment banking, in which leverage of investment and credit transactions can reach up to ten times of your investment funds. The credit and investment risk that can be generated is usually much higher than in classic deposit and credit banking. In the event of improper credit risk management and unreliable handling of credit transactions and investment in securities at an investment bank, this may result in generating multi-billion dollar financial losses. In a situation of such serious financial losses announced by a large investment bank, this may lead to a global financial crisis. This also happened in mid-September 2008, when Lehman Brothers' fourth largest investment bank globally, a bank with over 100 years of business and development history, went bankrupt and the world's largest global financial crisis began. This was caused by the moral hazard of the bank's managers, non-compliance with system security procedures, the use of unethical practices of selling junk securities to subsequent investors, unreliable assessment of credit risk for concluded credit transactions, etc., as well as systemic errors in the monetary policy of the Federal Reserve Bank. In addition, the dynamic development of econometric models used in credit risk management processes meant that banking supervision did not keep up with the improvement of control instruments for new types of credit transactions concluded with the use of new types of derivatives. In addition, the factors that generated the global financial crisis include other systemic factors that I wrote about in my scientific publications. These publications are available on the Research Gate website.
Best wishes
Dariusz Prokopowicz
- Badges
- Science topic
- Similar topics
- Econ
- Business Economics
- Business