Asset Quality
A measure of the likelihood of a loan or lease default, combined with a measure of marketability. Asset quality is a measure of the price at which a bank or other financial institution can sell a loan or lease to a third party, as determined by the borrower or lessee, especially by a bond issuer. Credit rating agencies determine credit quality to provide bond ratings; they may change these occasionally. FICO scores are measures of the credit quality of individuals. See also: Investment-grade, Junk [Farlex Financial Dictionary].
Asset quality is an aspect of bank management that entails evaluating a firm's assets to measure the level and size of credit risk associated with its operation. It relates to the left-hand side of a bank balance sheet and focuses on the quality of loans that provides earnings for a bank. Asset quality and loan quality are terms with basically the same meaning management is considered extremely important by the banking sector. According to the Basle Committee on Banking Supervision, the core principles for adequate banking supervision comprised twenty-five core principles. Seven were designed to address the relevant issues of bank asset quality or credit risk management [Abata, 39].
Asset Quality. Farlex Financial Dictionary. Retrieved from: https://financial-dictionary.thefreedictionary.com/Asset+Quality
Abata, M. A. (2014). Asset Quality and Bank Performance: A Study of Commercial Banks in Nigeria. Research Journal of Finance and Accounting, Vol.5, No.18, 39.