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In: Finance

Explain in detail why capital regulations and capital management are important in the banking industry.

  1. Explain in detail why capital regulations and capital management are important in the banking industry.

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Expert Solution

Firstly , Capital Regulations are important in banking industry because it is an standard to guard the banks by setting up a risk-sensitive minimum requirement of capital. The regulatory capital is set by regulatory authority , and the banks are required to maintain some certain level of capital.

Secondly , Capital management is important because it is directly linked with the risk and the risk of the bank always influence the strategic choices.

And also capital management is the part of an asset which is used to repay all the customers and people who want to claim in case the bank dont have enough liquidity due to the loss it bears in the operations .

jeff jeffy answered 2 years ago
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