What Is Capital Risk?

In the financial field, capital risk refers to the risk that a commercial bank has too little capital and therefore lacks the ability to bear risk losses, and lacks the ability to finally pay off deposits and other liabilities, threatening the safety of a commercial bank.

Capital risk

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In the financial field, capital risk refers to the risk that a commercial bank has too little capital and therefore lacks the ability to bear risk losses, and lacks the ability to finally pay off deposits and other liabilities, threatening the safety of a commercial bank.
Chinese name
Capital risk
Meaning
Commercial banks have too little capital
Types of
Words
Field
financial
Capital risk has a significant impact on the normal operation of a commercial bank. Because the capital has the functions of not having to repay and can bear operating risks. If all commercial banks' capital sources are capital, all risks will be borne by the commercial banks themselves; if the capital sources and liabilities each account for 50%, half of the financial risks will be borne by depositors. Due to the intermediary characteristics of commercial banks in large-scale social production, it is impossible for commercial banks to avoid debt to the public. Therefore, the adequacy of capital is particularly important. The more sufficient the capital is, the more it can use the capital to compensate the losses incurred, and protect commercial banks from accidental losses and survive the crisis, thereby protecting the interests of depositors. The quality of asset management of many commercial enterprises in China is low and there are too many non-performing debts, which fails to meet the requirements of the "capital adequacy ratio of no less than 8% (Article 39 of the Commercial Banking Law). risk.
In the stock and securities market, capital risk refers to the possibility that when the investment is settled, investors may not be able to recover the original investment amount or there is a large difference in expected returns.

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