Traditional Culture Encyclopedia - Traditional culture - What does the bank risk classification include?
What does the bank risk classification include?
Credit risk, also known as default risk. Refers to the borrower's failure to repay the loan principal and interest as agreed in the contract, resulting in bank losses. This is one of the main risks faced by commercial banks. There is a contract between the bank and the lender, and the lender must return the principal and interest to the bank at maturity.
Interest rate risk refers to the possibility that the fluctuation of interest rates in money market and capital market will affect the economic losses of commercial banks such as debt cost and asset income through deposit, loan and borrowing.
Liquidity risk refers to the possibility that the bank's own current assets can't meet the needs of paying the due liabilities immediately, which makes the bank lose its solvency and cause losses. Liquidity risk, on the one hand, is inherent risk, which is caused by insufficient liquidity; On the other hand, it is also the most common situation. Other kinds of risks are hidden and accumulated for a long time, and finally break out in the form of liquidity risk.
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