Question

As economic conditions change, how do banks adjust their asset portfolio? Research and provide some examples.

  1. As economic conditions change, how do banks adjust their asset portfolio? Research and provide some examples.

Homework Answers

Answer #1

The banks adjust their asset portfolios with the changes in economy depending the situation is favourable or not.As the economic conditions change, the banks loan portfolio also changes.The assets portfolio of the banks are exposed to economic conditions as if the economy goes down those who have taken loans may find it difficilt to repay.

For example:If the economy is expected to be stronger then the banks would get encouraged to give more loans as the probability that a default may occur decreases and the potential for return would be higher.

For example:During weak economic conditions the banks are more cautious and reduces the amount of new loans to businesses.Under these conditions the banks would increase credit.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Research and provide examples of some “do’s” and “don’ts” when conducting parent-teacher conferences. How will you...
Research and provide examples of some “do’s” and “don’ts” when conducting parent-teacher conferences. How will you prepare? What are some important items to remember that you could put on a checklist to do before, during, and after a parent-teacher conference?
Describe the properties of a normal distribution, and provide some examples of how they might manifest...
Describe the properties of a normal distribution, and provide some examples of how they might manifest themselves in real business situations. Why is the Normal distribution important in Statistics? How do we check whether the data collected in a research project comes from a Normal distribution?
how does banks adjust capital ratio? Does it have to do with ROA, ROE, and equity...
how does banks adjust capital ratio? Does it have to do with ROA, ROE, and equity multiplier? Please explain, it's for my finance class. thank you!!
What are some examples of a fictitious fact pattern in accounting research (Please provide more than...
What are some examples of a fictitious fact pattern in accounting research (Please provide more than 3)
Provide two examples of chronic lifestyle conditions and two examples of how you would implement person-centred...
Provide two examples of chronic lifestyle conditions and two examples of how you would implement person-centred support to facilitate self-determination and choice
Part 1: What are the economic arguments for and against environmental sustainability initiatives? Provide relevant examples...
Part 1: What are the economic arguments for and against environmental sustainability initiatives? Provide relevant examples from your reading/research on the topic Part 2: What are the economic arguments for and against social sustainability initiatives? What personal choices have you made as a consumer with respect to environmental or social sustainability? Provide specific examples from your reading/research
How do economists define a "bubble"? Provide an example of an asset market that you think...
How do economists define a "bubble"? Provide an example of an asset market that you think could be the next bubble and explain why. (Do not use the examples cited in your textbook).
Deficits do not necessarily burden future generations. Discuss and provide some examples.
Deficits do not necessarily burden future generations. Discuss and provide some examples.
What are some of the most important financial management decisions? Provide some real-life examples based on...
What are some of the most important financial management decisions? Provide some real-life examples based on your research.
Write some paragraphs to discuss entrepreneurship - What makes a successful business owner? Provide examples or...
Write some paragraphs to discuss entrepreneurship - What makes a successful business owner? Provide examples or research to support your opinions. Please do not use palagiarism.