Final answer:
GE Capital uses strategic partnerships to expand their business reach and to diversify investments, aligning with broader financial strategies that include selling loans and holding government bonds to mitigate risk.
Step-by-step explanation:
GE Capital, GE's lending arm, uses strategic partnerships with financial institutions in South Korea, Spain, Turkey, and elsewhere to reach more geographic and technological markets and to diversify investments and risk. By engaging in these partnerships, they aim to expand their operational footprint and gain access to new markets, while also mitigating the financial risks associated with lending and investments. This approach aligns with broader financial strategies, such as selling loans on the secondary loan market, holding assets in the form of government bonds or reserves, and co-financing initiatives like the IFC Small and Medium Enterprise Fund and the Critical Ecosystems Partnership Fund. These measures are crucial, particularly in the event of a lengthy recession, which can see a bank's net worth decline as loan defaults increase. Strategic partnerships, in conjunction with other risk management techniques, form part of a multifaceted approach to ensure financial stability and growth in diverse economic conditions.