A bank is said to be highly leveraged if

Question

Quizplus · Accepted Answer

A bank is considered highly leveraged if its assets are very large in relation to its equity. This means that the bank's level of debt is relatively high compared to its level of equity or capital, which could increase the risk of insolvency or default in the event of adverse conditions in the market. A highly leveraged bank may also be more vulnerable to liquidity shocks or funding difficulties. Making risky loans or being dependent on interbank funding may increase the riskiness of a bank, but it does not necessarily mean that it is highly leveraged.

A Bank Is Said to Be Highly Leveraged If