An FI with a low level of leverage, such as a high level of capitalisation:

Question

Quizplus · Accepted Answer

A low level of leverage, indicated by a high level of capitalisation, means that the financial institution has a higher level of equity as compared to debt. This enhances the sustainability and resilience of the FI by improving its ability to withstand losses, remain solvent and maintain financial stability. Additionally, a higher level of capitalisation enhances confidence among investors and customers, resulting in lower funding costs and better access to funding sources.

An FI with a Low Level of Leverage, Such as a High