Meltdown risk (risk of excessive leverage)

The risk that a general deleveraging process will put overall asset prices under pressure. This reduces the fair value of the assets reported in the balance sheet and equity declines. In the course of Basel III, institutions must take this risk into account; specific rules for calculating it have not yet been issued. – See contagion effects, liquidity maturity balance sheet, liquidity management, market risk, risk models, simulation test, stress test, volatility risk. – Cf. BaFin Annual Report 2011, p. 67 (from 2015, a description of this risk will be mandatory for banks).

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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