The motivation in a balance sheet transaction is to transfer loans on a financial institution's balance sheet and obtain capital relief.

Question

Quizplus · Accepted Answer

The statement accurately describes the motivation behind a balance sheet transaction. Financial institutions often engage in these transactions to transfer loans, which are considered assets on their balance sheets, to another entity, thereby reducing their risk exposure and allowing them to free up capital for other purposes. This can provide relief from regulatory or capital requirements and potentially improve their financial performance.

The Motivation in a Balance Sheet Transaction Is to Transfer