By Moorad Choudhry
An creation to Banking offers an advent to liquidity possibility administration and asset-liability administration. It starts off with an summary of contemporary banking, the pursuits of a financial institution, how they function, and the way a breakdown within the banking procedure contributed to the main issue. next chapters introduce the basic workings of a financial institution and discover ALM and liquidity possibility administration in higher element. As regulators circulation to implement liquidity possibility administration in banks, and ongoing must greater deal with a bank's resources and liabilities, this e-book 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
Selling further shares is not always popular amongst existing shareholders as it dilutes the extent of their ownership; moreover, there are a host of other factors to consider including whether there is any appetite in the market for that company’s shares. A bank loan is often inﬂexible, and the interest rate charged by the bank may be comparatively high for all but the highest quality companies. We say ‘comparatively’, because there is often a cheaper way for corporates to borrow money: by tapping the bond markets.
Source: Bank ﬁnancial statements. The cost of funding is a key variable in generating overall NII. 3 Even in an era of high-street competition, the interest payable on short-term 3 These are referred to as NIBLs (non-interest-bearing liabilities). BANK BUSINESS AND CAPITAL 17 liabilities such as instant access deposits is far below the wholesale market interest rate. This is a funding advantage for retail banks when compared with investment banks, which generally do not have a retail deposit base.
Essentially, banker’s acceptances are instruments created to facilitate commercial trade transactions. The instrument is called a banker’s acceptance because a bank accepts the ultimate responsibility to repay the loan to its holder. The use of banker’s acceptances to ﬁnance commercial transactions is known as acceptance ﬁnancing. The transactions for which acceptances are created include import and export of goods, the storage and shipping of goods between two overseas countries, where neither the importer nor the exporter is based in the home country,3 and the storage and shipping of goods between two entities based at home.
An Introduction to Banking: Liquidity Risk and Asset-Liability Management by Moorad Choudhry