Credit risk is the likelihood that a bank will be unable to meet depositor withdrawal demands and other liabilities when due.

Question

Quizplus · Accepted Answer

Credit risk refers to the likelihood of a borrower defaulting on their loan obligations, not the ability of a bank to meet its own liabilities. The correct definition of credit risk is the risk of loss due to a borrower's failure to repay a loan or meet contractual obligations.

Credit Risk Is the Likelihood That a Bank Will Be