Explaining a Bank's Investment Loans on Capitalization

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Explain a Bank's Investment Loans on Capitalization Introduction Over the last several years, the banking sector has been facing a number of challenges. This is because many of the loans that were made went into default (which had an impact on their balance sheet). As a result, regulators have been forced to seize different lenders to prevent a system wide collapse. This is important is showing, how the kinds of loans that are underwritten by banks will have an impact on their profit margins. To fully understand what is happening requires examining how the market value of a bank's investments / loans will have an effect on capitalization. This will be accomplished by: comparing a bank with a firm that is not involved in the financial services industry, understanding how this could impede retail functions, studying the significance of capital ratios and discussing possible trade offs in relation to current events. Together, these elements will offer specific insights about how the investment and loan activities of the bank will have an impact on their liquidity position. ("Failed Bank List") Compare and Contrast Citigroup versus Crocs The bank that will be examined is Citigroup. The non-financial based entity is Crocs. These two firms were selected, because a comparison will show the differences in the business models based upon investment and loan activities. This is the point that we can offer specific insights as to how these activities can influence the balance

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