Summary: The concept of risk management serves as the unifying theme. A bank's asset and liability management committee (ALCO) or risk management committee is responsible for the overall financial planning and management of the bank's profitability and risk profile. The book emphasizes how managers can develop and implement strategies to maximize stockholders' wealth by balancing the trade-off between banking risks and returns. One of the book's primary purposes is to explain ...show more how market risk (interest rate risk, equity price risk, and foreign exchange rate risk), liquidity risk, credit risk, capital/solvency risk and operational risk are measured and how decisions to alter a bank's risk profile affects profitability and growth opportunities. The book demonstrates how risk management decisions in different areas affect each other and the overall profitability and risk of the institution.Edition/Copyright: 6TH 06
- NEW! Currency: Impact of new banking regulations.
- Cash flow analysis in lending: Expanded discussion reflects new emphasis.
- Discussion of hedge accounting under FAS 133: Its implications for financial services companies are discussed along with hedge criteria, risk exposure, and the accounting standards.
- Revised discussion of interest rate futures, forwards and swaps as risk management tools.
- Added cases: Bank Performance Analysis, Commercial Lending, Consumer Lending, Liquidity Analysis, Project Finance and Managing a Bank's Investment Portfolio, reflect current issues.
- Expanded Excel Template for Student Use: Credit and Cash Flow Analysis and Bank Performance Analysis allow students to learn from doing.
- Management Tools Included: Early, integrated coverage of management tools, including asset/liability management strategies, GAP & EVE analysis and the use of off-balance sheet instruments such as futures, forwards and swaps, serves as an analytical tool for managing interest rate risks.
- NEW! Detailed critique: Basel II capital requirements and their likely impact.
- NEW! Discussion: New fee-based sources of revenue.
- NEW! Contrast: Structure and performance differences of community banks versus larger institutions.
- NEW! Focus: Strategies and risks associated with rising interest rates.
- NEW! Simplified bank performance model format using the UBPR to interpret bank financial information.
- NEW! New Contemporary Issues: Examples of actual bank activities and decision analysis.
- NEW! Reduced number of chapters: Supplementary information accessible via the web.
- Updated use of UBPR data and analysis: Discussion of the Uniform Bank Performance Report, created by the FDIC, has been expanded and includes discussion of the different ratios.
Publisher: South-Western Publishing Co.
Year Published: 2006
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