The increased opportunity for a bank to securitize loans into liquid and tradable assets is likely to affect which type of risk?

Question

Quizplus · Accepted Answer

Securitization of loans increases the bank's ability to transfer credit risk to the market, therefore affecting market risk. Sovereign risk relates to the risk of a government defaulting on their debt, insolvency risk refers to the bank's own financial stability, and technological risk relates to the risk of technology failure or cyber attacks.

The Increased Opportunity for a Bank to Securitize Loans into Liquid