objectives of commercial banks

Question 1

objective of commercial bank

Answer 1

-profit max: borrow short term and lend long term. take more risk

Question 2

how do banks resolve failure and issues of failure

Answer 2

-system risk, recession, lost incomes, bank bailouts (helping banks)

-need for liquidity, security (safe loans) to manage risk and avoid insolvency therefore need to sacrifice profit
-balanced portfolio of assets is key