By Moorad Choudhry
An creation to Banking offers an creation to liquidity hazard administration and asset-liability administration. It starts with an summary of recent banking, the objectives of a financial institution, how they function, and the way a breakdown within the banking method contributed to the situation. next chapters introduce the elemental workings of a financial institution and discover ALM and liquidity probability administration in larger aspect. As regulators circulation to implement liquidity chance administration in banks, and ongoing must greater deal with a bank's resources and liabilities, this ebook is a must have reference for all finance practitioners.
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Extra info for An Introduction to Banking: Liquidity Risk and Asset-Liability Management
During a boom period in the cycle, corporate and retail default rates are at historically lower levels, and so a bank can afford to lower the level of its provisioning. However, prudent management dictates that senior managers are familiar with their markets and are able to judge when provision levels should increase. In other words, banks should ‘know their market’. R. (1939) Value and Capital, Oxford: Clarendon Press. Higson, C. (1995) Business Finance, Oxford: Blackwell. This page intentionally left blank Chapter 2 THE MONEY MARKETS 24 AN INTRODUCTION TO BANKING P art of the global debt capital markets, the money markets are a separate market in their own right.
Provision is based on subjective measurement by management of how much of the loan portfolio can be expected to be repaid by the borrower. CAPITAL MARKETS A ‘capital market’ is the term used to describe the market for raising and investing ﬁnance. The economies of developed countries and a large number of developing countries are based on ﬁnancial systems that encompass investors and borrowers, markets and trading arrangements. A market can be one in the traditional sense such as an exchange where ﬁnancial instruments are bought and sold on a trading ﬂoor, or it may refer to one where participants deal with each other over the telephone or via electronic screens.
4, which shows one of the rates screens displayed by Tullett & Tokyo, money brokers in London, on a Bloomberg screen. Essentially the same screen is displayed on Reuters. The screen has been reproduced with permission from Tullett’s and Bloomberg. The screen displays sterling interbank and CD bid and offer rates for maturities up to 1 year as at 18 November 2005. 40. The maturity marked ‘T/N’ is ‘tom-next’, or ‘tomorrow-to-the-next’, which is the overnight rate for deposits commencing tomorrow.