What could be some reasons why a banks total assets, liabilities and shareholder equity change?

Expert Solution

Total asset and total liability as well as shareholders equity of the bank is constantly changing because the bank are always synchronising its books of account in relation to the existing economic conditions and trying to make the most out of it.

The total assets and total liabilities of the banks are changing in relation to make a synchronisation with the changing monetary policy of the central bank of a country because Central Bank of a country will be continuously changing its monetary policy in relation to managing the monetary flow in the economy to keep the demand and inflation under check so the bank will be significantly adopting those rate of interest along with other Reserve requirement and it will be lending and accepting the deposits based upon the policies which has been changed by the central bank of an economy so it can be said that total assets and liabilities will be changing due to differences in their deposits and lending.

Shareholders equity will also be changing because banks are continuously raising new capital and they are trying to adjust their overall capital in relation to the need of different capital structure and banks are also making profits which are increasing their reserves and surplus so banks are constantly changing their shareholders equity.

Hence, it can be said that there is a change related to total asset along with total liability and total shareholders equity of the bank continuously in synchronisation with the market condition.

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