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# Bank Credit Quality

## Definition

The standard of borrowers and investments that banks finance, which affects the likelihood of repayment and the overall stability of the banking system. High credit quality is essential for banking stability and economic development.

## Source Chapter

Book II, Chapter 2

## Context

Smith examines how banks must maintain high credit quality in their lending to ensure stability and economic benefit. He analyses the factors that affect credit quality and the consequences of poor credit standards.

## Economic Domain

Regulation

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