These requirements exist for the protection of investors who hold an interest in these types of businesses. Governing bodies place reserve requirements upon these institutions based on the premise that stakeholders will still receive limited payment should insolvency occur.
Investment dictionary. Academic. 2012.
risk-based capital ratio — Bank requirement that there be a minimum ratio of estimated total capital to estimated risk weighted asset. Bloomberg Financial Dictionary … Financial and business terms
Capital requirement — The capital requirement is a bank regulation, which sets a framework on how banks and depository institutions must handle their capital. The categorization of assets and capital is highly standardized so that it can be risk weighted.… … Wikipedia
Capital Requirement — The standardized requirements in place for banks and other depository institutions, which determines how much liquidity is required to be held for a certain level of assets through regulatory agencies such as the Bank for International… … Investment dictionary
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Enterprise risk management — In business, enterprise risk management (ERM) includes the methods and processes used by organizations to manage risks and seize opportunities related to the achievement of their objectives. ERM provides a framework for risk management, which… … Wikipedia
credit risk — The risk to earnings or capital from the potential that a borrower or counterparty will fail to perform on an obligation. Usually, but not always, the obligation in question is a requirement to make interest or principal payments. Sometimes… … Financial and business terms
