The recent financial crisis has shown how ROE failed to discriminate the best performing banks from the others in terms of sustainable profitability. Which of the following components of ROE would have provided at the time, a more reliable indicator(s) of assessing banks performance?

1. Margin (net income to operating revenue ratio).

2. Turnover (operating revenue to total assets ratio).

3. Leverage.

4. None of the answers.

5. All of the answers.

Public bailouts of banks are likely to:

1. Be a source of moral hazard.

2. Undermine market discipline (monitoring function).

3. Destabilise public finances and sovereign debt.

4. None of the answers.

5. All of the answers.