# Asset quality

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{{Short description|Gem Festival}}
'''Asset quality''' is an evaluation of asset to measure the credit risk associated with it.<ref>{{Cite journal |last=Bernstein |first=David |date=1996-05-01 |title=Asset quality and scale economies in banking |url=https://dx.doi.org/10.1016/0148-6195%2896%2900074-4 |journal=Journal of Economics and Business |language=en |volume=48 |issue=2 |pages=157–166 |doi=10.1016/0148-6195(96)00074-4 |issn=0148-6195|url-access=subscription }}</ref>

==Description==
Asset quality is related to the left-hand side of the [bank](/source/bank) [balance sheet](/source/balance_sheet). [Bank manager](/source/Bank_manager)s are concerned with the quality of their [loan](/source/loan)s since that provides earnings for the bank. Loan quality and asset quality are two terms with basically the same meaning.

[Government bond](/source/Government_bond)s and [T-bills](/source/United_States_Treasury_security) are considered as good quality loans whereas [junk bond](/source/junk_bond)s, [corporate credit](/source/corporate_credit)s to low [credit score firm](/source/credit_score_firm)s etc. are bad quality loans. A bad quality loan has a higher probability of becoming a [non-performing loan](/source/non-performing_loan) with no return.

Bank management components are:
# [Asset management](/source/Asset_management)
# [Liquidity management](/source/Liquidity_management)
# [Liability management](/source/Liability_management)
# [Capital adequacy management](/source/Capital_adequacy_management)
# [Risk management](/source/Risk_management)

==See also==
{{Portal|Banks}}
* [Risk-weighted asset](/source/Risk-weighted_asset)
* [CAMELS ratings](/source/CAMELS_ratings)
* [Bank condition](/source/Bank_condition)
* [Banking regulation](/source/Banking_regulation)

==References==
{{Reflist}}

Category:Banking terms
Category:Bank regulation

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Adapted from the Wikipedia article [Asset quality](https://en.wikipedia.org/wiki/Asset_quality) by Wikipedia contributors ([contributor history](https://en.wikipedia.org/wiki/Asset_quality?action=history)). Available under [Creative Commons Attribution-ShareAlike 4.0 International](https://creativecommons.org/licenses/by-sa/4.0/). Changes may have been made.