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Submitted by Johan Hendriks on
Dear Asli, As your research shows the quality of capital is indeed important for the survival of a bank in case of a shock in the system. However what I would like to stress is the quality of the assets and the risk associated to it would get more attention. In the extreme case a bank could have a great leverage position (lots of capital) but if all their assets are valued too high there is a serious risk of insolvency. What's your view on this?