Rough ride ahead
Article Abstract:
The US banking industry could be badly hit if the US bubble economy is deflated. US banks appear sophisticated and profitable and they appear well captalized, yet capital adequacy ratios do not take risk sufficienty into account. There has ben a drop in the quality of loan portfolios, and stockholders have sought higher returns on equity which has involved higher risks. High debt levels for households and businesses mean that defaults are likely, especially if there is a recession following a drop in stock prices, and this will hit banks.
Publication Name: The Economist (UK)
Subject: Business, international
ISSN: 0013-0613
Year: 1999
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The business of banking
Article Abstract:
Banks are important financial institutions, though they face competition from other financial intermediaries. There are risks associated with the industry, such as bad debts, especially when economies are in recession. Bank failure can have a major impact on the economy, and this is why they are regulated. Deposit guarantee schemes are common. There are a number of different types of institutions involved in the industry, which makes regulation difficult.
Publication Name: The Economist (UK)
Subject: Business, international
ISSN: 0013-0613
Year: 1999
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