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Difference between capital adequacy ratio and capital to risk weighted ratio |
| Answer» PLEASE mark this as brain list answer.....Explanation:The capital adequacy ratio (CAR) is a measurement of a bank's available capital expressed as a percentage of a bank's risk-weighted credit exposures. The capital adequacy ratio, also KNOWN as capital-to-risk weighted assets ratio (CRAR), is used to protect depositors and promote the STABILITY and efficiency of financial systems around the world. Two types of capital are measured: tier-1 capital, which can ABSORB losses without a bank being required to cease trading, and tier-2 capital, which can absorb losses in the EVENT of a winding-up and so provides a lesser degree of protection to depositors. | |