Question

Why have banks substantially increased off-balance sheet activities over the past two decades?

Answer 1

Bank have substantially increase the the off balance sheet activities in thethe past two decades because -

A.these activities will be creating higher income for the banks and the bank would be likely to report more than the normal income so it will help the bank in creating a large amount of money

B.these of balance sheet items are not guided by the public disclosures so it will help the bank in hiding the information

C. It will also help the bank in commitment of fraudulent activities

D. It is also helpful in escaping of the monetary policy standards

E. This can also be helpful for the bank in order to hide the sensitive information from shareholders and not affect the share price of the bank in the market.

It can be summed up that due to the increasing competitiveness, the banks are resorting to more off balance sheet activities.