---
entity_slug: bank_financial_stability_factors
evaluator: null
evaluated_at: '2026-02-23T00:41:41.750263'
overall_score: 3.2
scores:
- name: definition_precision
  value: 3.0
  max_value: 5.0
  rationale: The definition identifies specific components (capital adequacy, liquidity
    management, risk management) but remains somewhat circular by defining "stability
    factors" as elements that "contribute to banking stability." The concept is reasonably
    distinct but could be more precisely delineated.
- name: source_grounding
  value: 2.0
  max_value: 5.0
  rationale: While Smith does discuss banking practices in Book II, Chapter 2, the
    modern terminology of "capital adequacy," "liquidity management," and "risk management
    practices" appears to impose contemporary banking regulatory concepts onto Smith's
    18th-century analysis. Smith's discussion is more focused on note-issuing practices
    and reserve management than these specific modern frameworks.
- name: domain_placement
  value: 4.0
  max_value: 5.0
  rationale: The "Regulation" domain assignment is appropriate given that these factors
    are typically addressed through regulatory oversight and banking supervision.
    This aligns well with Smith's discussion of banking practices and their systemic
    implications.
- name: vsm_relevance
  value: 4.0
  max_value: 5.0
  rationale: This entity maps well to S3 (internal regulation/audit) as it encompasses
    the internal controls and management practices that banks use to maintain operational
    viability. It also has relevance to S2 (coordination) in terms of managing oscillations
    and maintaining system stability.
- name: explanatory_value
  value: 3.0
  max_value: 5.0
  rationale: The entity provides moderate explanatory value by identifying key structural
    elements that affect banking system stability, but it functions more as a categorization
    of factors rather than illuminating specific causal mechanisms. It names important
    phenomena without deeply explaining how these factors interact or operate.
---

# Evaluation: Bank Financial Stability Factors

## definition_precision — 3.0 / 5.0

The definition identifies specific components (capital adequacy, liquidity management, risk management) but remains somewhat circular by defining "stability factors" as elements that "contribute to banking stability." The concept is reasonably distinct but could be more precisely delineated.

## source_grounding — 2.0 / 5.0

While Smith does discuss banking practices in Book II, Chapter 2, the modern terminology of "capital adequacy," "liquidity management," and "risk management practices" appears to impose contemporary banking regulatory concepts onto Smith's 18th-century analysis. Smith's discussion is more focused on note-issuing practices and reserve management than these specific modern frameworks.

## domain_placement — 4.0 / 5.0

The "Regulation" domain assignment is appropriate given that these factors are typically addressed through regulatory oversight and banking supervision. This aligns well with Smith's discussion of banking practices and their systemic implications.

## vsm_relevance — 4.0 / 5.0

This entity maps well to S3 (internal regulation/audit) as it encompasses the internal controls and management practices that banks use to maintain operational viability. It also has relevance to S2 (coordination) in terms of managing oscillations and maintaining system stability.

## explanatory_value — 3.0 / 5.0

The entity provides moderate explanatory value by identifying key structural elements that affect banking system stability, but it functions more as a categorization of factors rather than illuminating specific causal mechanisms. It names important phenomena without deeply explaining how these factors interact or operate.
