What is an Asset Conversion Loan?
Asset conversion refers to the process of designing and selling assets suitable for investors' risk appetite, and using the funds obtained from the sale of assets to purchase assets with a higher degree of risk, realizing risk sharing and helping investors convert risk assets into security assets.
Asset conversion theory
Right!
- Chinese name
- Asset conversion theory
- Types of
- theory
- Attributes
- funds
- Year
- 1930s
- Condition
- Banks remain liquid
- Asset conversion refers to the process of designing and selling assets suitable for investors' risk appetite, and using the funds obtained from the sale of assets to purchase assets with a higher degree of risk, realizing risk sharing and helping investors convert risk assets into security assets.
- Transformation theory was born in the 1930s. According to this theory, the key to maintaining liquidity of a bank is not that the term of the loan is consistent with the term of the deposit, but rather the ability to realise the assets held by the bank. Can maintain sufficient liquidity. Further, if a certain amount of funds are arranged and sufficient assets are easily purchased for transfer, the pressure to maintain liquidity can be eliminated and the remaining funds can pursue higher returns.
- insufficient:
- 1. A large number of loans without material guarantees have created conditions for credit expansion;
- 2. When the economic situation and market conditions fluctuated greatly, the large-scale selling of securities also caused huge losses to banks;
- 3. The extension of the average loan term will increase the liquidity risk of the banking system.