Many regulators would like to see bank capital requirements raised. Consider a proposal to increase the minimum Tier 1 and total capital ratios to 9 percent and 12 percent, respectively. What impact would this have on bank risk? Would small banks and large banks have equal opportunity in meeting these requirements? What impact would this have on banking industry consolidation?
Answer to relevant QuestionsRegulators put great pressure on banks to reduce their common dividend payments when asset problems appear. Discuss the costs and benefits of cutting dividends. What motivation encourages commercial banks to make variable rate mortgages? Why are variable rate mortgage rates normally below fixed mortgage rates? As the level of rates declines, would you expect banks to increase or ...Suppose that you are considering making a working capital loan to a business customer of your bank. You do the cash to cash cycle analysis and determine that the firm’s daily average cost of goods sold is $ 50,000. What ...Discuss reasons why banks might choose to include the following covenants in a loan agreement: a. Cash dividends cannot exceed 60 percent of pretax income. b. Interim financial statements must be provided monthly. c. ...Discuss why loan originators might consider selling a loan. Why might an institution consider buying loan participation? Why do large institutions participate in loan syndications? What are the advantages and disadvantages ...
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