DEMO — development content for layout testing. Not real editorial reporting.
DEMO content for development and layout testing — not real editorial reporting.
Banks fund themselves with deposits, borrowing and shareholders’ equity. Equity capital absorbs losses first, protecting depositors and creditors.
How it works
Regulators set minimum capital ratios relative to risk-weighted assets, plus additional buffers that can be drawn down in bad times.
Capital is the part of a bank’s funding that can absorb losses without the bank failing. Its level shapes lending and stability.
What to watch
Higher capital makes banks more resilient but can raise their funding costs; the debate is over where the balance lies.
Key concepts
- Banking
- Regulation
