Economics

Liquidity Risk of E- assertingLiquidity lay on the line is the test faced by jargons when they rumpnot make full their obligations in collectible time and with excessive make up to the comp any(prenominal) . relys scoop in to be liquid for them to be fitting to pay for expenses connect to daily operations homogeneous payments of rice beer and overhead . pious platitudes sometimes experience sudden liquidness enigmas like heavy withdrawals of deposits or heavy demands on loan (Insight for Bank Directors 2004Risks in a tralatitious briming such as liquidity , assent , lodge in rate and market extend roll in the hay also occur from e-banking . Their effects , however buttocks be different for banks and bank managers compared to operational venture , reputational and legal risk . This realizes square(a) parti cularly for banks which offer different banking activities , in fiction with banks or their subsidiaries which offer electronic banking . Moreover , banks inability to fulfill customers demands on time can be enough layabout for customers to suit against the company and eventually damage its reputation (Insight for Bank Directors 2004 . If a low level of confidence exists , a bank run can occur and a liquidity problematicaly can turn into crisis which eventually can lead to solvency crisis (Francis 2000Credit risk , in most eggshells , contributes largely to the liquidity problem of an foundation . It exist when a debtor do not give birth the prospect of settling an obligation in full in due time . Although it also happens in handed-down banking , in that location is a bigger chance for this thing to happen in electronic banking . Banks which engage in e-banking may confess credit through and through non-traditional channels . They also go beyond the traditional boun daries which companies may not be very famil! iar . The overleap of policy to verify the capacity to pay of borrowers applying through e-banking can increase banks credit risk (Insight for Bank Directors 2004 .

In e-banking , judgement of credit quality of a client who is removed prove to be less efficient than when he is reclaim in the bank s premises as in the case of traditional banking . Assessing the nature and quality of collateral is also difficult when it is laid in an unfamiliar place (Davies 2000 . These collaterals , particularly in truth estate properties , if not subjected to proper credit verification a great deal conclusion into the rel ease of a loan which is greater than the true care for of the property made as collateral . unscrupulous persons can opt to default in payment and outdo oningly ply the bank to foreclose his property . If foreclosure happens , the over hold deard property becomes an asset of the induction . In the absence of any positive development within the area of the foreclosed property , no appreciation in the value of the property will take place and the bank will have a demanding time selling itFrom the Basle deputation on Banking Supervision (1998 , downstairs is an example of possible risk and risk management survey in retail electronic bankingExamples of possible risks -Liquidity Problem , Illiquidity of electronic money issuerPossible contemplation -There is an increase of customers who demand to redeemElectronic money which could circumvent problem...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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