Question

b Explain the capital adequacy management safety.

Answer 1

Capital adequacy management safety is always inclined at management of a higher capital adequacy ratio that will be helpful in maintaining a better capital and growth strategies.

A company which is having higher capital adequacy ratio will be always having a competitive edge because it will be always having a better capital and better lending ability in comparison with its competitors because higher capital adequacy ratio will mean that the bank is highly capitalised and it is in a better position to issue more of the loan to more of the companies and it's asset quality is also good.

Overall it can be said that the capital adequacy management safety will be higher capital adequacy ratio and which will be helpful for the management in order to grow and sustain competitive advantage over the competitors.