The ability of an economic entity in general, and a bank in particular, to absorb losses without jeopardizing its own existence. The concept of the ability to absorb losses in the banking industry is not easy to outline. The key idea governing this notion is that appropriate instruments must not only allow their issuer to escape insolvency in the event of a stress situation, but should also favor recapitalization. – See default, Basel III, Cook ratio, coverage ratio, equity ratio, hybrid capital, capital requirements regulation, leverage ratio, risk, risk management, loss potential, loss ratio, mandatory convertible bond. – Deutsche Bundesbank Monthly Report of April 2013, p. 52 ff. (definitions).

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
E-mail address: info@ekrah.com
https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk
https://www.jung-stilling-gesellschaft.de/merk/
https://www.gerhardmerk.de/

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