What are the various approaches to managing the credit risk


1. What is adverse selection? How does a depository institution (bank) reduce it? What went wrong in the financial crisis of 2007-2009?

2. What are the various approaches to managing the credit risk of a FI’s portfolio?

 

3. Describe the trade-off faced by banks in liquidity management?

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Financial Management: What are the various approaches to managing the credit risk
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