Managing financial institutions: an asset, liability approach
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| Main Authors: | , , |
|---|---|
| Format: | Book |
| Language: | English |
| Published: |
Fort Worth [u.a.]
Dryden Press
2000
|
| Edition: | 4. ed. |
| Series: | The Dryden Press series in finance
|
| Subjects: | |
| Online Access: | Inhaltsverzeichnis |
| Physical Description: | XXIII, 935 S. graph. Darst. |
| ISBN: | 0030220548 |
Staff View
MARC
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| 245 | 1 | 0 | |a Managing financial institutions |b an asset, liability approach |c Mona J. Gardner ; Dixie L. Mills ; Elizabeth S. Cooperman |
| 250 | |a 4. ed. | ||
| 264 | 1 | |a Fort Worth [u.a.] |b Dryden Press |c 2000 | |
| 300 | |a XXIII, 935 S. |b graph. Darst. | ||
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| 490 | 0 | |a The Dryden Press series in finance | |
| 650 | 4 | |a Asset-liability management | |
| 650 | 4 | |a Risk management | |
| 650 | 4 | |a Financial institutions -- Management | |
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Record in the Search Index
| _version_ | 1804138161366892544 |
|---|---|
| adam_text | Contents in Brief
CHAPTER 1 Changing Times for Financial Institutions 1
J cw£ . The Environment of Asset/Liability Management 27
CHAPTER 2 Asset/Liability Management 29
CHAPTER 3 Regulation, Technology and Financial Innovation 40
CHAPTER 4 Background 115
«_/ awfrl. JL Overview and Performance Analysis of Depository
Institutions 171
CHAPTER 5 Overview of Financial Statements For Depository Institutions 173
CHAPTER 6 Depository Institution Performance and Risk Analysis 199
CHAPTER 1 Credit Unions and Savings Institutions 249
CHAPTER 8 Capital Regulations and Management 285
CHAPTER 9 Managing Noninterest Revenues and Associated Risks 320
cs aw£W . Management Issues and Performance Analysis of
Nondepository Institutions 355
CHAPTER 10 Insurance Company Financial Management Issues 357
CHAPTER 11 Investment Banks, Retail Security Firms, and Venture Capitalists 396
CHAPTER 12 Mutual Fund and Pension Fund Management 441
CHAPTER 13 Managing Nonbanks 491
c/awtlS Interest Rate and Foreign Exchange Environments 531
CHAPTER 14 Interest Rates, Exchange Rates, and Inflation 534
CHAPTER 15 The Term Structure of Interest Rates 584
CHAPTER 16 Interest Rate Risk Measurement and Immunization Using
Duration 621
xvi ? CONTENTS IN BRIEF
CHAPTER 17 Interest Rate Risk Management 657
CHAPTER 18 Interest Risk Management 689
«_y awtv Particular Asset/Liability Management Problems: Depository
Institutions 729
CHAPTER 19 Asset Management 731
CHAPTER 20 Deposit and Liability Management 773
CHAPTER 21 Asset Management 817
CHAPTER 22 Global Financial Crises and International Management Issues 884
APPENDIX A Mathematical Tables 913
NAME INDEX 918
SUBJECT INDEX 925
Contents
CHAPTER 1 Changing Times for Financial Institutions 1
What Do Financial Institutions Do? 3
Changing Times for Financial Institutions 3
Financial Versus Real Assets and Financial Versus Nonfinancial Finns 7
Financial Institutions: What Are They? 9
The Economic Functions of Financial Institutions 15
Why Intermediaries? Reduced Transactions and Information Costs 19
The Changing Role of Financial Institutions in the Technological Age 21
Societal Concerns with Change and Banking for the Unbanked 22
Summary 23
^J aw£ . The Environment of Asset/Liability Management 27
CHAPTER 2 Asset/Liability Management: What and Why? 29
Managing the Spread 30
Managing the Burden 30
Asset/Liability Management Defined 31
Asset/Liability Management: Who Sets Objectives? 32
Managerial Objectives in Financial Institutions 34
A Balancing Act 36
Summary 36
CHAPTER 3 Regulation, Technology and Financial Innovation 40
Why Regulate? 41
The Regulatory Dialect: A Conceptual Framework for Regulation, Innovation,
and Reform 42
Regulation of Depository Institutions 50
Regulation of Finance Companies 55
Regulation of Insurance Companies 56
Regulation of Pension Funds 58
Regulation of Investment Companies 59
Regulation of Securities Firms 60
Origins of Financial Innovation and Regulatory Reform in the 1980s 61
The Synthesis: DIDMCA and Garn-St. Germain 66
New Regulatory Stringency Under FIRREA and FDICIA 74
The Pendulum Swings Again: Further Deregulation in the 1990s 81
Globalization of Financial Markets 84
Renewed Emphasis on Business Ethics 84
Changes in the Regulatory Structure 85
Summary 86
Appendix 3A: The Federal Reserve System and International Policy Coordination 91
CHAPTER 4 Background: Consolidation Trends, Moral Hazard and Agency Issues,
Types of Ownership and Organizations 115
The Effect of Financial Leverage on Financial Institution Operations 117
The Effect of Equity Ownership on Manager/Owner Behavior 121
Organizational Forms: Financial Holding Companies 124
Growth ofBHCs and the Regulatory Dialectic 124
Regulation ofBHCs 131
Mutually Owned Institutions 143
Not-For-Profit Institutions 152
The Future: Virtual FIs and Smart Cards 154
Economies of Scale and Scope 157
Summary 160
xviii ? CONTENTS
cs awtW Overview and Performance Analysis of Depository
Institutions 171
CHAPTER 5 Overview of Financial Statements For Depository Institutions 173
Overview of Commercial Bank Financial Statements 174
FDIC-Insured Balance Sheets In 1996 177
Income Statements For FDIC-Insured Banks in 1996 182
Looking More Closely At Bank Profits 184
Using Income Relationships To Forecast Target NIMs 189
Summary 192
Appendix 5A: Overview of Ojf-Balance Sheet Items 195
CHAPTER 6 Depository Institution Performance and Risk Analysis 199
General Objectives and Guidelines 200
Performance Evaluation Illustrated 205
Further Analysis: First National Bank of Maryland 216
Summary 223
Appendix 6A: Sample Uniform Bank Performance Report 232
CHAPTER 7 Credit Unions and Savings Institutions 249
Savings Institutions: A Brief History and Recent Regulatory Changes 251
A Brief History of C Us 255
Comparison of Industry Structures: Banks, Thrifts, and CUs 260
Comparison of Assets and Liabilities: Banks, Thrifts, and CUs 263
Performance of Depositories: A Comparison 268
More on the Thrift Crisis of the 1980s 274
Are Depository Institution Failures Contagious? 278
Summary 280
CHAPTER 8 Capital Regulations and Management 285
Market Versus Book Value Definitions of Capital 286
Preferences by Different Agents for Capital and Its Uses 289
Balancing Shareholders and Regulators Interests 291
Calculating Risk-Based Assets and Risk-Based Off-Balance Sheet Assets 296
Definitions of Capital Adequacy 298
Beyond Regulatory Requirements 302
How Much Capital Should Be Returned to Shareholders? 309
Management of Capital: Dividend Policy 311
Summary 313
CHAPTER 9 Managing Noninterest Revenues and Associated Risks: Traditional and
Nontraditional Sources of Fee Income, Risk Management—Value at
Risk and Economic Value Added, Securitization, and Other
Off-Balance Sheet Items 320
Why Fee Income? 322
How Much Noninterest Revenues Do Banks Produce? 325
A Brief Overview of Traditional Fee-Based Services 325
Correspondent Banking 329
Corporate Cash Management and Management Consulting 331
A Brief Overview of Newer Fee-Based Activities: Securities, Insurance Brokerage,
Mutual Funds, Real Estate, and Other Activities 333
Banks Entrance Into Nontraditional Fee-Generating Activities and Cultural Clashes 347
Fee Income From Off-Balance Sheet Activities 347
Loan Sales 348
Securitization 350
Summary 353
CONTENTS ? xix
«_y aw£ . JL JL Management Issues and Performance Analysis of
Nondepository Institutions 355
CHAPTER 10 Insurance Company Financial Management Issues 357
Overview of the Operations of Insurance Companies 358
Performance Evaluation of Life Insurance Companies 366
Performance Evaluation ofP/L Companies 369
Social and Economic Forces Affecting Insurers 373
An Overview of Insurance Operations 378
U. S. Risk-Based Capital Requirements 380
Regulatory Monitoring for Solvency 381
Private Insurer Solvency Ratings 381
Types of Insurance Policies and the Determination of Premiums 381
Asset Management Considerations 386
Summary 387
CHAPTER 11 Investment Banks, Retail Security Firms, and Venture Capitalists:
Management and Ethical Issues 396
Structure of the Industry, Ttjpes of Firms, and Profit Cycles 398
Structure of the Industry and Its Cycles 398
Registering and Marketing the Traditional IPO 427
Summary 430
CHAPTER 12 Mutual Fund and Pension Fund Management 441
Overview of the Management Structure of Mutual Funds 443
Ownership Structure of Affiliates 444
Recent Diversification and Consolidation for Mutual Funds 446
Basic Groups of Investment Companies 448
Types of Mutual Funds 449
Mutual Fund Families 451
The Costs of Mutual Fund Ownership 453
Regulations for Mutual Funds and Regulatory Issues 457
Recent Regulatory Concerns 458
Measuring the Performance and Risk of Mutual Funds 459
Risk-Adjusted Performance Measures 464
Value at Risk 465
Sharpe Ratio 466
Modigliani or M-Square Measure 466
Morningstar Ratings 467
Pension Funds, Mutual Funds Role, and the Retirement Market 468
Pension Plan Growth, ERISA, and Types of Employer Pension Plans 468
Management Issues in Defined Benefit Plans 473
What Is the Pension Contract Between All Stakeholders? 473
Should Pension Smoothing Activities Be Used? 479
Who Owns Pension Surplus Assets? 480
Recent Conversions of Pensions to New Cash-Balance Plans 482
Summary 483
CHAPTER 13 Managing Nonbanks: Finance Companies, Financial Service Firm
Conglomerates, and Merger Considerations 491
An Overview of Finance Companies 492
Types of Finance Companies 493
Structure of the Industry and Trends in the 1990s 496
Income, Expenses, and Profitability of Finance Companies 499
Regulations for Finance Companies 501
Performance Information and Measurement 502
An Overview of Diversified Financial Firms: What Are They? 504
xx ? CONTENTS
Reasons for the Development of Financial Conglomerates 508
Trends in Financial Service Conglomerates 511
Some Firms Are Successful, Others Are Not: Examples 511
Managerial Implications of Diversified Financial Services Firms 518
Summary 522
iy (M^Y V Interest Rate and Foreign Exchange Environments 531
CHAPTER 14 Interest Rates, Exchange Rates, and Inflation: Theories and
Forecasting 534
Overview of the Chapter 535
Why Theories Are Important to Managers 535
A Historical Look at Interest Rates 535
The General Level of Interest Rates 539
Loanable Funds Theory 540
Loanable Funds Theory and Interest Rate Forecasting 543
Expected Inflation and the Loanable Funds Theory 549
Further Evaluation of the Fisher Theory 551
Calculating Effective Annual Yields 556
Differences in Yields for Money Market Securities 560
Currency Exchange Rates 564
Brief Overview of the Process for Introducing the Eu ro 5 76
Summary 578
CHAPTER 15 The Term Structure of Interest Rates 584
The Term Structure Defined: A Closer Look 585
Identifying the Existing Term Structure 585
Unbiased (Pure) Expectations Theory 594
Criticisms of the Pure Expectations Theory 597
Empirical Tests of the Term Structure Theories 604
Application of Term Structure Theories to Financial Institutions Management 606
Interest Rate Forecasting 606
Using Forward Rates Estimated from Yield Curves to Set Loan Credit Risk
Premiums 610
Managing the Securities Portfolio 611
Summary 612
CHAPTER 16 Interest Rate Risk Measurement and Immunization Using Duration 621
Interest Rate Risk Defined 622
The Price/Yield Connection 622
Putting Them Together 623
The Price/Yield Relationship Illustrated 623
The Two Sides of Interest Rate Risk 626
Bond Theories 627
Implications for Financial Institutions 629
Effects of Interest Rate Changes on Common Stock 630
Duration: An Idea Ahead of Its Time 631
Measuring Interest Rate Risk: The Relationship Between Duration and Price Changes 634
Estimating Percentage Price Changes 634
Estimating Interest Rate Elasticity 635
Applications of Duration to Asset/Liability Management 636
Portfolio Immunization 639
Financial Institutions and Immunization 643
Duration Gap: Measuring an Institution s Overall Interest Rate Risk 643
Example: Calculating a Bank s Duration Gap 644
Immunization and Its Cost 648
Summary 651
CONTENTS ? xxi
CHAPTER 17 Interest Rate Risk Management: Interest Rates and Foreign Currency
Futures 657
Financial Institutions and Financial Futures 659
Futures Contracts 659
The Developing Global Marketplace 661
Interest Rate Futures 663
Futures Prices and Market Yields: An Illustration 665
Short Versus Long Hedges 666
Risk and the Financial Futures Markets 670
Choosing the Optimal Number of Contracts 673
Futures as a Supplement to Gap Management 675
Interest Rate Futures: Regulatory Restrictions and Financial Reporting 676
Foreign Currency Futures 678
Comparison of Forward and Futures Markets 680
Summary 683
Appendix 17A: A Duration-Based Futures Hedge 687
CHAPTER 18 Interest Risk Management: Index Futures, Options, Swaps, and Other
Derivatives 689
Stock Index Futures 690
Theoretical Basis of Stock Index Futures 690
History and Characteristics of Stock Index Futures 691
Financial Institutions and Stock Index Futures 694
Program Trading: Index Arbitrage 697
Other Index Futures 700
Options on Financial Assets 700
Options and Financial Institutions 703
Hedging with Options 705
Options and Futures Hedging: A Comparison 709
Interest Rate Swaps 711
Motivations for Swaps 712
Swaps as a Hedging Tool 712
More Exotic Swaps 716
Swaps Versus Futures Hedging 717
Swap Options and Futures 717
Interest Rate Caps, Floors, and Collars 718
Other New Derivatives for Financial Institution Management 720
Summary 723
c/a^ Particular Asset/Liability Management Problems:
Depository Institutions 729
CHAPTER 19 Asset Management: Liquidity Reserves and the Securities
Portfolio 731
Importance of Liquidity in Depository Institutions 732
Liquidity: The Risk/Return Trade-Off 733
Discretionary and Nondlscretionary Factors 740
Managing the Liquidity Position 743
The Securities Portfolio as a Source of Stored Liquidity 745
Securitization of Loans and Loan Sales as Liquidity Sources 746
Liquidity Risk of Other Financial Institutions 746
Depository Institution Investment Portfolio Management 748
The Typical Bank Investment Portfolio 753
Investments in Mutual Funds 759
Decline in Investments in Government Securities 760
Summary 761
xxii ? CONTENTS
CHAPTER 20 Deposit and Liability Management 773
Factors to Consider in Deposit and Liability Management 776
Brief History of Liability Management 782
History of Liability Management 784
Using Liabilities to Cover Reserve Deficiencies 784
Using Liabilities to Meet Loan Demand or Pursue Growth 787
Factors Influencing the Use of Liability Management 792
Noninterest Competition Among Depositories 793
Economic Efficiency of Noninterest Competition 793
Acquisition of Funds in a Deregulated Environment 797
Wholesale Versus Retail Funds 797
Mix of Fund Sources 799
Pricing 799
Disclosure Requirements: Truth in Savings 803
Pricing Strategies in Practice 804
Effect of Federal Deposit Insurance 805
Coverage Provided 807
Summary 808
CHAPTER 21 Asset Management: Commercial, Consumer, and Mortgage
Lending 817
Trends in Types of Loans 818
Commercial Lending: Recent Trends 818
Unique Aspects of Bank Lending to Medium-Sized to Small Firms 819
Consumer Lending: Recent Trends 822
Who Makes Consumer and Home Mortgage Loans? 825
Functions of the Credit Process: The Credit Process as Protection Against
Default Risk 826
The Role of the Credit Process in Business Development 827
Loan Committee Review 827
Bank Written Loan Policies 827
Compliance Policies 828
Credit Execution Policies 829
Lender Compensation Policies 829
Loan Request Procedures 830
Quantitative Credit Scoring Models 832
Commercial Lending: Financial Statement Analysis 835
Sample Loan Presentation 837
Establishing Loan Trends 839
Noninterest Terms and Conditions 840
Quoted Base Rates on Commercial Loans 843
Risk Premium on Loans 845
Other Terms: Collateral 845
Restrictive Covenants 846
Other Considerations 846
Term Loans 847
Commercial Real Estate Loans 847
Agricultural Loans 847
Consumer Loans 848
Special Considerations of Mortgage Loans 851
Small Business Loans 852
Types of Higher Risk Lending 853
Lending to Hedge Funds 854
Loan Monitoring and Review 854
Loan Monitoring, Regulation, and Financial Reporting 855
Other Lending Considerations 856
Lender Liability Including Environmental Liability 857
Community Reinvestment Act Revisions 858
Sales of Commercial Loans and Some Securitizations 859
CONTENTS ? xxiii
Providing One-Stop Shopping for All Corporate Needs 859
Improvement in Credit Risk Management 860
Summary 860
Appendix 21A: Sample Loan Underwriting Guidelines 869
Appendix 21B: Fictional Sample Loan Presentation 873
Appendix 21C: Commercial Loan Pricing Formula 881
CHAPTER 22 Global Financial Crises and International Management Issues 884
Management of International Loans 893
Risk Analysis in International Lending 897
Understanding Surprises in Country and Currency Risk 898
A Recap of the Asian Financial Crisis and How It Spread 899
Warning Signs for the Asian Financial Crisis 902
Financial Institution Involvement in the Crises 905
Attempts to Try to Help Nations Avert Future Financial Crises 906
Cultural Management Issues 908
Summary 909
APPENDIX A Mathematical Tables 913
NAME INDEX 918
SUBJECT INDEX 925
|
| adam_txt |
Contents in Brief
CHAPTER 1 Changing Times for Financial Institutions 1
J cw£\. The Environment of Asset/Liability Management 27
CHAPTER 2 Asset/Liability Management 29
CHAPTER 3 Regulation, Technology and Financial Innovation 40
CHAPTER 4 Background 115
«_/ awfrl. JL Overview and Performance Analysis of Depository
Institutions 171
CHAPTER 5 Overview of Financial Statements For Depository Institutions 173
CHAPTER 6 Depository Institution Performance and Risk Analysis 199
CHAPTER 1 Credit Unions and Savings Institutions 249
CHAPTER 8 Capital Regulations and Management 285
CHAPTER 9 Managing Noninterest Revenues and Associated Risks 320
cs aw£W\. Management Issues and Performance Analysis of
Nondepository Institutions 355
CHAPTER 10 Insurance Company Financial Management Issues 357
CHAPTER 11 Investment Banks, Retail Security Firms, and Venture Capitalists 396
CHAPTER 12 Mutual Fund and Pension Fund Management 441
CHAPTER 13 Managing Nonbanks 491
c/awtlS Interest Rate and Foreign Exchange Environments 531
CHAPTER 14 Interest Rates, Exchange Rates, and Inflation 534
CHAPTER 15 The Term Structure of Interest Rates 584
CHAPTER 16 Interest Rate Risk Measurement and Immunization Using
Duration 621
xvi ? CONTENTS IN BRIEF
CHAPTER 17 Interest Rate Risk Management 657
CHAPTER 18 Interest Risk Management 689
«_y awtv Particular Asset/Liability Management Problems: Depository
Institutions 729
CHAPTER 19 Asset Management 731
CHAPTER 20 Deposit and Liability Management 773
CHAPTER 21 Asset Management 817
CHAPTER 22 Global Financial Crises and International Management Issues 884
APPENDIX A Mathematical Tables 913
NAME INDEX 918
SUBJECT INDEX 925
Contents
CHAPTER 1 Changing Times for Financial Institutions 1
What Do Financial Institutions Do? 3
Changing Times for Financial Institutions 3
Financial Versus Real Assets and Financial Versus Nonfinancial Finns 7
Financial Institutions: What Are They? 9
The Economic Functions of Financial Institutions 15
Why Intermediaries? Reduced Transactions and Information Costs 19
The Changing Role of Financial Institutions in the Technological Age 21
Societal Concerns with Change and Banking for the Unbanked 22
Summary 23
^J aw£\. The Environment of Asset/Liability Management 27
CHAPTER 2 Asset/Liability Management: What and Why? 29
Managing the Spread 30
Managing the Burden 30
Asset/Liability Management Defined 31
Asset/Liability Management: Who Sets Objectives? 32
Managerial Objectives in Financial Institutions 34
A Balancing Act 36
Summary 36
CHAPTER 3 Regulation, Technology and Financial Innovation 40
Why Regulate? 41
The Regulatory Dialect: A Conceptual Framework for Regulation, Innovation,
and Reform 42
Regulation of Depository Institutions 50
Regulation of Finance Companies 55
Regulation of Insurance Companies 56
Regulation of Pension Funds 58
Regulation of Investment Companies 59
Regulation of Securities Firms 60
Origins of Financial Innovation and Regulatory Reform in the 1980s 61
The Synthesis: DIDMCA and Garn-St. Germain 66
New Regulatory Stringency Under FIRREA and FDICIA 74
The Pendulum Swings Again: Further Deregulation in the 1990s 81
Globalization of Financial Markets 84
Renewed Emphasis on Business Ethics 84
Changes in the Regulatory Structure 85
Summary 86
Appendix 3A: The Federal Reserve System and International Policy Coordination 91
CHAPTER 4 Background: Consolidation Trends, Moral Hazard and Agency Issues,
Types of Ownership and Organizations 115
The Effect of Financial Leverage on Financial Institution Operations 117
The Effect of Equity Ownership on Manager/Owner Behavior 121
Organizational Forms: Financial Holding Companies 124
Growth ofBHCs and the Regulatory Dialectic 124
Regulation ofBHCs 131
Mutually Owned Institutions 143
Not-For-Profit Institutions 152
The Future: Virtual FIs and Smart Cards 154
Economies of Scale and Scope 157
Summary 160
xviii ? CONTENTS
cs awtW Overview and Performance Analysis of Depository
Institutions 171
CHAPTER 5 Overview of Financial Statements For Depository Institutions 173
Overview of Commercial Bank Financial Statements 174
FDIC-Insured Balance Sheets In 1996 177
Income Statements For FDIC-Insured Banks in 1996 182
Looking More Closely At Bank Profits 184
Using Income Relationships To Forecast Target NIMs 189
Summary 192
Appendix 5A: Overview of Ojf-Balance Sheet Items 195
CHAPTER 6 Depository Institution Performance and Risk Analysis 199
General Objectives and Guidelines 200
Performance Evaluation Illustrated 205
Further Analysis: First National Bank of Maryland 216
Summary 223
Appendix 6A: Sample Uniform Bank Performance Report 232
CHAPTER 7 Credit Unions and Savings Institutions 249
Savings Institutions: A Brief History and Recent Regulatory Changes 251
A Brief History of C Us 255
Comparison of Industry Structures: Banks, Thrifts, and CUs 260
Comparison of Assets and Liabilities: Banks, Thrifts, and CUs 263
Performance of Depositories: A Comparison 268
More on the Thrift Crisis of the 1980s 274
Are Depository Institution Failures Contagious? 278
Summary 280
CHAPTER 8 Capital Regulations and Management 285
Market Versus Book Value Definitions of Capital 286
Preferences by Different Agents for Capital and Its Uses 289
Balancing Shareholders' and Regulators' Interests 291
Calculating Risk-Based Assets and Risk-Based Off-Balance Sheet Assets 296
Definitions of Capital Adequacy 298
Beyond Regulatory Requirements 302
How Much Capital Should Be Returned to Shareholders? 309
Management of Capital: Dividend Policy 311
Summary 313
CHAPTER 9 Managing Noninterest Revenues and Associated Risks: Traditional and
Nontraditional Sources of Fee Income, Risk Management—Value at
Risk and Economic Value Added, Securitization, and Other
Off-Balance Sheet Items 320
Why Fee Income? 322
How Much Noninterest Revenues Do Banks Produce? 325
A Brief Overview of Traditional Fee-Based Services 325
Correspondent Banking 329
Corporate Cash Management and Management Consulting 331
A Brief Overview of Newer Fee-Based Activities: Securities, Insurance Brokerage,
Mutual Funds, Real Estate, and Other Activities 333
Banks' Entrance Into Nontraditional Fee-Generating Activities and Cultural Clashes 347
Fee Income From Off-Balance Sheet Activities 347
Loan Sales 348
Securitization 350
Summary 353
CONTENTS ? xix
«_y aw£\. JL JL Management Issues and Performance Analysis of
Nondepository Institutions 355
CHAPTER 10 Insurance Company Financial Management Issues 357
Overview of the Operations of Insurance Companies 358
Performance Evaluation of Life Insurance Companies 366
Performance Evaluation ofP/L Companies 369
Social and Economic Forces Affecting Insurers 373
An Overview of Insurance Operations 378
U. S. Risk-Based Capital Requirements 380
Regulatory Monitoring for Solvency 381
Private Insurer Solvency Ratings 381
Types of Insurance Policies and the Determination of Premiums 381
Asset Management Considerations 386
Summary 387
CHAPTER 11 Investment Banks, Retail Security Firms, and Venture Capitalists:
Management and Ethical Issues 396
Structure of the Industry, Ttjpes of Firms, and Profit Cycles 398
Structure of the Industry and Its Cycles 398
Registering and Marketing the Traditional IPO 427
Summary 430
CHAPTER 12 Mutual Fund and Pension Fund Management 441
Overview of the Management Structure of Mutual Funds 443
Ownership Structure of Affiliates 444
Recent Diversification and Consolidation for Mutual Funds 446
Basic Groups of Investment Companies 448
Types of Mutual Funds 449
Mutual Fund Families 451
The Costs of Mutual Fund Ownership 453
Regulations for Mutual Funds and Regulatory Issues 457
Recent Regulatory Concerns 458
Measuring the Performance and Risk of Mutual Funds 459
Risk-Adjusted Performance Measures 464
Value at Risk 465
Sharpe Ratio 466
Modigliani or M-Square Measure 466
Morningstar Ratings 467
Pension Funds, Mutual Funds' Role, and the Retirement Market 468
Pension Plan Growth, ERISA, and Types of Employer Pension Plans 468
Management Issues in Defined Benefit Plans 473
What Is the Pension Contract Between All Stakeholders? 473
Should Pension Smoothing Activities Be Used? 479
Who Owns Pension Surplus Assets? 480
Recent Conversions of Pensions to New Cash-Balance Plans 482
Summary 483
CHAPTER 13 Managing Nonbanks: Finance Companies, Financial Service Firm
Conglomerates, and Merger Considerations 491
An Overview of Finance Companies 492
Types of Finance Companies 493
Structure of the Industry and Trends in the 1990s 496
Income, Expenses, and Profitability of Finance Companies 499
Regulations for Finance Companies 501
Performance Information and Measurement 502
An Overview of Diversified Financial Firms: What Are They? 504
xx ? CONTENTS
Reasons for the Development of Financial Conglomerates 508
Trends in Financial Service Conglomerates 511
Some Firms Are Successful, Others Are Not: Examples 511
Managerial Implications of Diversified Financial Services Firms 518
Summary 522
iy (M^Y V Interest Rate and Foreign Exchange Environments 531
CHAPTER 14 Interest Rates, Exchange Rates, and Inflation: Theories and
Forecasting 534
Overview of the Chapter 535
Why Theories Are Important to Managers 535
A Historical Look at Interest Rates 535
The General Level of Interest Rates 539
Loanable Funds Theory 540
Loanable Funds Theory and Interest Rate Forecasting 543
Expected Inflation and the Loanable Funds Theory 549
Further Evaluation of the Fisher Theory 551
Calculating Effective Annual Yields 556
Differences in Yields for Money Market Securities 560
Currency Exchange Rates 564
Brief Overview of the Process for Introducing the Eu ro 5 76
Summary 578
CHAPTER 15 The Term Structure of Interest Rates 584
The Term Structure Defined: A Closer Look 585
Identifying the Existing Term Structure 585
Unbiased (Pure) Expectations Theory 594
Criticisms of the Pure Expectations Theory 597
Empirical Tests of the Term Structure Theories 604
Application of Term Structure Theories to Financial Institutions Management 606
Interest Rate Forecasting 606
Using Forward Rates Estimated from Yield Curves to Set Loan Credit Risk
Premiums 610
Managing the Securities Portfolio 611
Summary 612
CHAPTER 16 Interest Rate Risk Measurement and Immunization Using Duration 621
Interest Rate Risk Defined 622
The Price/Yield Connection 622
Putting Them Together 623
The Price/Yield Relationship Illustrated 623
The Two Sides of Interest Rate Risk 626
Bond Theories 627
Implications for Financial Institutions 629
Effects of Interest Rate Changes on Common Stock 630
Duration: An Idea Ahead of Its Time 631
Measuring Interest Rate Risk: The Relationship Between Duration and Price Changes 634
Estimating Percentage Price Changes 634
Estimating Interest Rate Elasticity 635
Applications of Duration to Asset/Liability Management 636
Portfolio Immunization 639
Financial Institutions and Immunization 643
Duration Gap: Measuring an Institution's Overall Interest Rate Risk 643
Example: Calculating a Bank's Duration Gap 644
Immunization and Its Cost 648
Summary 651
CONTENTS ? xxi
CHAPTER 17 Interest Rate Risk Management: Interest Rates and Foreign Currency
Futures 657
Financial Institutions and Financial Futures 659
Futures Contracts 659
The Developing Global Marketplace 661
Interest Rate Futures 663
Futures Prices and Market Yields: An Illustration 665
Short Versus Long Hedges 666
Risk and the Financial Futures Markets 670
Choosing the Optimal Number of Contracts 673
Futures as a Supplement to Gap Management 675
Interest Rate Futures: Regulatory Restrictions and Financial Reporting 676
Foreign Currency Futures 678
Comparison of Forward and Futures Markets 680
Summary 683
Appendix 17A: A Duration-Based Futures Hedge 687
CHAPTER 18 Interest Risk Management: Index Futures, Options, Swaps, and Other
Derivatives 689
Stock Index Futures 690
Theoretical Basis of Stock Index Futures 690
History and Characteristics of Stock Index Futures 691
Financial Institutions and Stock Index Futures 694
Program Trading: Index Arbitrage 697
Other Index Futures 700
Options on Financial Assets 700
Options and Financial Institutions 703
Hedging with Options 705
Options and Futures Hedging: A Comparison 709
Interest Rate Swaps 711
Motivations for Swaps 712
Swaps as a Hedging Tool 712
More Exotic Swaps 716
Swaps Versus Futures Hedging 717
Swap Options and Futures 717
Interest Rate Caps, Floors, and Collars 718
Other New Derivatives for Financial Institution Management 720
Summary 723
c/a^\ Particular Asset/Liability Management Problems:
Depository Institutions 729
CHAPTER 19 Asset Management: Liquidity Reserves and the Securities
Portfolio 731
Importance of Liquidity in Depository Institutions 732
Liquidity: The Risk/Return Trade-Off 733
Discretionary and Nondlscretionary Factors 740
Managing the Liquidity Position 743
The Securities Portfolio as a Source of Stored Liquidity 745
Securitization of Loans and Loan Sales as Liquidity Sources 746
Liquidity Risk of Other Financial Institutions 746
Depository Institution Investment Portfolio Management 748
The Typical Bank Investment Portfolio 753
Investments in Mutual Funds 759
Decline in Investments in Government Securities 760
Summary 761
xxii ? CONTENTS
CHAPTER 20 Deposit and Liability Management 773
Factors to Consider in Deposit and Liability Management 776
Brief History of Liability Management 782
History of Liability Management 784
Using Liabilities to Cover Reserve Deficiencies 784
Using Liabilities to Meet Loan Demand or Pursue Growth 787
Factors Influencing the Use of Liability Management 792
Noninterest Competition Among Depositories 793
Economic Efficiency of Noninterest Competition 793
Acquisition of Funds in a Deregulated Environment 797
Wholesale Versus Retail Funds 797
Mix of Fund Sources 799
Pricing 799
Disclosure Requirements: Truth in Savings 803
Pricing Strategies in Practice 804
Effect of Federal Deposit Insurance 805
Coverage Provided 807
Summary 808
CHAPTER 21 Asset Management: Commercial, Consumer, and Mortgage
Lending 817
Trends in Types of Loans 818
Commercial Lending: Recent Trends 818
Unique Aspects of Bank Lending to Medium-Sized to Small Firms 819
Consumer Lending: Recent Trends 822
Who Makes Consumer and Home Mortgage Loans? 825
Functions of the Credit Process: The Credit Process as Protection Against
Default Risk 826
The Role of the Credit Process in Business Development 827
Loan Committee Review 827
Bank Written Loan Policies 827
Compliance Policies 828
Credit Execution Policies 829
Lender Compensation Policies 829
Loan Request Procedures 830
Quantitative Credit Scoring Models 832
Commercial Lending: Financial Statement Analysis 835
Sample Loan Presentation 837
Establishing Loan Trends 839
Noninterest Terms and Conditions 840
Quoted Base Rates on Commercial Loans 843
Risk Premium on Loans 845
Other Terms: Collateral 845
Restrictive Covenants 846
Other Considerations 846
Term Loans 847
Commercial Real Estate Loans 847
Agricultural Loans 847
Consumer Loans 848
Special Considerations of Mortgage Loans 851
Small Business Loans 852
Types of Higher Risk Lending 853
Lending to Hedge Funds 854
Loan Monitoring and Review 854
Loan Monitoring, Regulation, and Financial Reporting 855
Other Lending Considerations 856
Lender Liability Including Environmental Liability 857
Community Reinvestment Act Revisions 858
Sales of Commercial Loans and Some Securitizations 859
CONTENTS ? xxiii
Providing One-Stop Shopping for All Corporate Needs 859
Improvement in Credit Risk Management 860
Summary 860
Appendix 21A: Sample Loan Underwriting Guidelines 869
Appendix 21B: Fictional Sample Loan Presentation 873
Appendix 21C: Commercial Loan Pricing Formula 881
CHAPTER 22 Global Financial Crises and International Management Issues 884
Management of International Loans 893
Risk Analysis in International Lending 897
Understanding Surprises in Country and Currency Risk 898
A Recap of the Asian Financial Crisis and How It Spread 899
Warning Signs for the Asian Financial Crisis 902
Financial Institution Involvement in the Crises 905
Attempts to Try to Help Nations Avert Future Financial Crises 906
Cultural Management Issues 908
Summary 909
APPENDIX A Mathematical Tables 913
NAME INDEX 918
SUBJECT INDEX 925 |
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| author | Gardner, Mona J. Mills, Dixie L. Cooperman, Elizabeth S. |
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| dewey-full | 332.1/068/121 |
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| dewey-raw | 332.1/068/1 21 |
| dewey-search | 332.1/068/1 21 |
| dewey-sort | 3332.1 268 11 221 |
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| id | DE-604.BV023520734 |
| illustrated | Illustrated |
| index_date | 2024-07-02T22:32:49Z |
| indexdate | 2024-07-09T21:23:47Z |
| institution | BVB |
| isbn | 0030220548 |
| language | English |
| oai_aleph_id | oai:aleph.bib-bvb.de:BVB01-016841036 |
| oclc_num | 833510801 |
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| physical | XXIII, 935 S. graph. Darst. |
| publishDate | 2000 |
| publishDateSearch | 2000 |
| publishDateSort | 2000 |
| publisher | Dryden Press |
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| series2 | The Dryden Press series in finance |
| spelling | Gardner, Mona J. Verfasser aut Managing financial institutions an asset, liability approach Mona J. Gardner ; Dixie L. Mills ; Elizabeth S. Cooperman 4. ed. Fort Worth [u.a.] Dryden Press 2000 XXIII, 935 S. graph. Darst. txt rdacontent n rdamedia nc rdacarrier The Dryden Press series in finance Asset-liability management Risk management Financial institutions -- Management Management (DE-588)4037278-9 gnd rswk-swf Bank (DE-588)4004436-1 gnd rswk-swf Bank (DE-588)4004436-1 s Management (DE-588)4037278-9 s 1\p DE-604 Mills, Dixie L. Verfasser aut Cooperman, Elizabeth S. Verfasser aut HBZ Datenaustausch application/pdf http://bvbr.bib-bvb.de:8991/F?func=service&doc_library=BVB01&local_base=BVB01&doc_number=016841036&sequence=000002&line_number=0001&func_code=DB_RECORDS&service_type=MEDIA Inhaltsverzeichnis 1\p cgwrk 20201028 DE-101 https://d-nb.info/provenance/plan#cgwrk |
| spellingShingle | Gardner, Mona J. Mills, Dixie L. Cooperman, Elizabeth S. Managing financial institutions an asset, liability approach Asset-liability management Risk management Financial institutions -- Management Management (DE-588)4037278-9 gnd Bank (DE-588)4004436-1 gnd |
| subject_GND | (DE-588)4037278-9 (DE-588)4004436-1 |
| title | Managing financial institutions an asset, liability approach |
| title_auth | Managing financial institutions an asset, liability approach |
| title_exact_search | Managing financial institutions an asset, liability approach |
| title_exact_search_txtP | Managing financial institutions an asset, liability approach |
| title_full | Managing financial institutions an asset, liability approach Mona J. Gardner ; Dixie L. Mills ; Elizabeth S. Cooperman |
| title_fullStr | Managing financial institutions an asset, liability approach Mona J. Gardner ; Dixie L. Mills ; Elizabeth S. Cooperman |
| title_full_unstemmed | Managing financial institutions an asset, liability approach Mona J. Gardner ; Dixie L. Mills ; Elizabeth S. Cooperman |
| title_short | Managing financial institutions |
| title_sort | managing financial institutions an asset liability approach |
| title_sub | an asset, liability approach |
| topic | Asset-liability management Risk management Financial institutions -- Management Management (DE-588)4037278-9 gnd Bank (DE-588)4004436-1 gnd |
| topic_facet | Asset-liability management Risk management Financial institutions -- Management Management Bank |
| url | http://bvbr.bib-bvb.de:8991/F?func=service&doc_library=BVB01&local_base=BVB01&doc_number=016841036&sequence=000002&line_number=0001&func_code=DB_RECORDS&service_type=MEDIA |
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