Identifying Risk Factors in the Banking Sector

Mismanagement of risks alongside high interest rates have exposed cracks in the banking system, though not ruptured further due to soundness post-crisis reforms. Some companies default as interest rates rise, causing strains in real estate markets. Despite weak banks, the system remains fairly sound as households and corporates are in better financial shape post-pandemic. Resilience is seen in banks, but concerns persist for those with asset quality issues, low capital buffers, significant exposure to struggling sectors like commercial real estate, and unstable deposits.