Accounting & Marketing

The Bank Tends Choose the Asset with Finance by Only Short-Term Debt

Abstract

Nirosha Hewa Wellalage*

In monetary emergencies, monetary establishments (we call them banks in the remainder of this paper) frequently pursue decisions that are clearly wasteful from the social view, on both the resource side and the risk side. For instance, in the Incomparable Downturn, the home loan related resources held by banks encountered a huge deterioration in the meantime, banks funded their resources with high influence and an enormous part of momentary obligation which made their responsibility structure very delicate. Because of these wasteful ways of behaving of banks, presented new administrative apparatuses like liquidity and influence necessities. In any case, why banks went with decisions that demolish circumstances of resource and obligation simultaneously and whether new guidelines are viable in restraining banks' ways of behaving are as yet not satisfactory in the writing.