Philippine Regulatory Capital

Basel Capital Accord It has long been recognized that ventures and banking goes overtake in hand together. While other companies such as those in manufacturing, transaction and other industrial firms ar head over heels in avoiding risks, its a different scenario for the banking sector. Banks earn money (in the form of please earnings) by seeking risks (e.g., looking for borrower), understanding those risks (assessing the borrower) and taking them (lending to the borrower). With risks (possibility that unthought-of events will result in losses to the bank) being an inherent part of banking, one can only wonder if banks are protected from the possible adverse effects of risks taking. Is there a forcefield that safeguards banks from unexpected turn of events? Frankly, there is no forcefield that can shield banks from risks the way forcefield shielded Camp Big Falcon from attacks of the Bolzanian (oh, how I miss Voltez V!). But when its raining and we want to go out, we either use a jacket, an umbrella, or at outstrip a raincoat to protect ourselves. Oh yes, in the banking industry, we also fuck off something similar to those things. Ill call it CAPITAL. Capital, Defined For an entrepreneur, peachy will solely mean the money invested in the business.

An accountant laymans definition of capital would be stockholders equity computed by summing up all of the companys assets and deducting the total of the companys liabilities. While these definitions are right, capital for banks is defined in a different way. Banks capital is the amount held or required to be held by a financial institution to underpin the risk of loss in value of exposures, businesses etc., so as to protect the depositors and general creditors against loss. The diction required to be held emphasizes the regulated environment in which closely banks all over the world operate in. While risk of loss in value underscores what I have discussed in the preceding paragraph ? that banks earn money by... If you want to get a full essay, order it on our website: Orderessay

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