Lagos — In the MBA Banking and Finance course I took about three decades ago it was drummed into my ears that banks accomplish three things through the intermediation process: they gather funds from cash-surplus entities; they make credit judgments and assume credit risks; and they assume interest rate risk by using short-term deposits to fund longer term loans - a process known as maturity transformation.
Banks fail when flip-flops are the order of the day in government policies and regulations. They fail when they can't properly adjust to adverse changes in the business environment. A major cause of bank failures is the inability of regulatory and supervisory agencies to effectively perform their statutory duties.
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