Economics

Liquidity Risk of E- assertingLiquidity lay on the line is the assay faced by jargons when they rumpnot make full their obligations in due time and with excessive make up to the company . relys need to be liquid for them to be fitting to pay for expenses related to daily operations homogeneous payments of rice beer and overhead . Banks sometimes experience sudden liquidness enigmas like heavy withdrawals of deposits or heavy demands on loan (Insight for Bank Directors 2004Risks in a tralatitious banking such as liquidity , assent , interest rate and market happen roll in the hay also occur from e-banking . Their effects , however buttocks be different for banks and bank managers compared to operational risk , reputational and legal risk . This holds true particularly for banks which offer different banking activities , in simile with banks or their subsidiaries which offer electronic banking . Moreover , banks inability to meet customers demands on time can be enough fundament 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 problem can turn into crisis which eventually can lead to solvency crisis (Francis 2000Credit risk , in most cases , contributes largely to the liquidity problem of an knowledgeability . It exist when a debtor do not stomach 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 grant credit through non-traditional channels . They also go beyond the traditional boundaries which companies may not be very familiar . 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 far prove to be less efficient than when he is right 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 real estate properties , if not subjected to proper credit verification oftentimes conclusion into the release 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 pass 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 hard time selling itFrom the Basle deputation on Banking Supervision (1998 , below is an example of possible risk and risk management measure 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 pose problem...If you want to get a full essay, order it on our website: Ordercustompaper.com

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