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  1. #1

    trade-off

    What does it mean "trade-off", e.g.
    "There's a trade-off between having some entry, not from the best banks, and adding some risk to the banking system"

  2. #2

    Re: trade-off

    And one more. Could you say it with similar and easier words, to understand it better, thanks
    "The banks from developing countries may also direct (=manage) scarce (=rare)credit away from good uses at home"

  3. MikeNewYork's Avatar
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    #3

    Re: trade-off

    Quote Originally Posted by me78 View Post
    What does it mean "trade-off", e.g.
    "There's a trade-off between having some entry, not from the best banks, and adding some risk to the banking system"
    A trade-off means that one gets some good and some bad effects at the same time.

    Example:

    Thirty year mortgages are a trade-off. On one hand the monthly payment is lower; on the other hand the total cost of the loan is higher.

    I don't really see a trade-off in your sentence. It seems to be a warning that having poor banks enter (something) is risky.

  4. MikeNewYork's Avatar
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    #4

    Re: trade-off

    Quote Originally Posted by me78 View Post
    And one more. Could you say it with similar and easier words, to understand it better, thanks
    "The banks from developing countries may also direct (=manage) scarce (=rare)credit away from good uses at home"
    I'm not sure what "home" means in your sentence. Are you talking about the home of the banks or the country where the banks would be located?

    I would change "credit" to "capital".

  5. #5

    Re: trade-off

    The previor sentence is:
    "The banks from developing country can bring credit volatility and face more risk of a financial crisis in their home country. They may also direct scarce credit away from good uses at home."

    What I've understood is: the banks in the developing country bring more risk and thatswhy they are trying to reject the creditallowance or something like that. Is it right?

  6. MikeNewYork's Avatar
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    #6

    Re: trade-off

    Quote Originally Posted by me78 View Post
    The previor sentence is:
    "The banks from developing country can bring credit volatility and face more risk of a financial crisis in their home country. They may also direct scarce credit away from good uses at home."

    What I've understood is: the banks in the developing country bring more risk and thatswhy they are trying to reject the creditallowance or something like that. Is it right?
    It is definitely talking about risk but I'm still not clear about the second sentence.

  7. #7

    Re: trade-off

    Quote Originally Posted by MikeNewYork View Post
    A trade-off means that one gets some good and some bad effects at the same time.

    Example:

    Thirty year mortgages are a trade-off. On one hand the monthly payment is lower; on the other hand the total cost of the loan is higher.

    I don't really see a trade-off in your sentence. It seems to be a warning that having poor banks enter (something) is risky.

    Because banks with weak regulations do pose a risk when buying in developing countries. And thatswhy as entering in a new market they have advantage but it in the developing country is not so easy for banks. Maybe I've got the sence...

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