Asset quality
Asset quality is an evaluation of asset to measure the credit risk associated with it. Description
Asset quality is related to the left-hand side of the bank balance sheet. Bank managers are concerned with the quality of their loans since that provides earnings for the bank. Loan quality and asset quality are two terms with basically the same meaning. Government bonds and T-bills are considered as good quality loans whereas junk bonds, corporate credits to low credit score firms etc. are bad quality loans. A bad quality loan has a higher probability of becoming a non-performing loan with no return. Bank management components are:
 Asset management
 Liquidity management
 Liability management
 Capital adequacy management
 Risk management

See also

 Risk-weighted asset
 CAMELS ratings
 Bank condition
 Banking regulation

References

Banking terms
Bank regulation