Banking and the Management of Financial Institutions - General Principles of Bank Management
5 important questions on Banking and the Management of Financial Institutions - General Principles of Bank Management
What are the 4 primary concerns when managing a bank?
2. Asset Management (acquiring assets that have low have low rate of default by diversifying asset holdings)
3. Liability management (acquiring funds at low cost)
4. Capital adequacy management (decide the amount of capital the bank should maintain)
What is Credit Risk?
What is Interest-rate Risk?
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What are the 4 tools to maximize profit?
2. Purchase securities with high returns and low risk.
3. Lower risk by diversifying.
4. Balance need for liquidity against increased returns from less liquid assets.
What happened after 1960?
- Expansion of overnight loan markets and new financial instruments
- Checkable deposits have decreased in importance as source of bank funds
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