Common issues faced by all banks：High leverage and asset/liability mismatch pose a combination of risks.

1.Asset/liability mismatch

Banking operations are based on financial mismatching, which is inherently risky.

This mismatch occurs when: (1) banks do not hold enough cash to pay all depositors, (2) their primary assets are not repaid in the short term, and (3) loan sales take a considerable amount of time, especially when selling close to face value. Banks face risks with interest expenses and principal loss when borrowing short-term and lending long-term.

2.High leverage

Banks operate on slim asset returns by paying low interest rates to depositors and borrowing funds at slightly higher rates. They rely on volume and substantial leverage to transform low asset returns into high equity returns, conducting a large amount of business with a small amount of equity capital.

3.Trust reliance

Depositors seek safety and liquidity by placing money in banks, accepting low returns in exchange.

Trust in a bank's ability to pay is crucial. Services offered by one bank are generally indistinguishable from those of other banks.