Question

What special problem do off-balance-sheet activities present to bank regulators, and what have they done about it?

Short answer

problems of off-balance-sheet activities are data for off-balance-sheet activities are not continuously available, asymmetric information issues may arise....

Bank regulators have done the problem, they have forced an additional risk-based bank capital prerequisite.....

Step-by-step solution

Concept Introduction

The term off-balance sheet (OBSF) financing indicates a bookkeeping practice that includes recording corporate resources or liabilities so that doesn't cause them to show up on an organization's balance sheet. Off-balance sheet financing is a lawful practice insofar as organizations adhere to bookkeeping guidelines and guidelines. It becomes unlawful on the off chance that corporate heads use it to conceal resources or liabilities from financial backers and monetary controllers.

Explanation

problems of off-balance-sheet activities are :

A. data for off-balance-sheet activities are not continuously available, asymmetric information issues may arise.

B. These activities do not seem on bank balance sheets and thus cannot be controlled with bank capital requirements.

C. These activities do not appear on bank balance sheets and thus limit a bank's capacity to pursue high-risk investments.

Bank regulators done the problem :

A. Bank regulators have brought down the level of Off-balance-sheet exercises allowed for banks.

B. Bank regulators have chosen to overlook some of the off-balance-sheet exercises by banks.

C. Bank regulators have forced an additional risk-based bank capital prerequisite.

Step 3:Final Answer

problems of off-balance-sheet activities are data for off-balance-sheet activities are not continuously available, asymmetric information issues may arise....

Bank regulators have done the problem, they have forced an additional risk-based bank capital prerequisite....