Abstract This paper discusses the advantages and disadvantages of creditrisk management software as a risk mitigation tool. The author explains the use of credit-scoring models. The paper demonstrates the application of credit-scoring to CRM software.
From the Paper "For more than four decades, creditors doing business with consumers have been using credit-scoring models to determine if applicants are good credit risks. Information about an applicant's credit history including the amount of debt they have outstanding their bill-paying history any history of late payments and the number of times they have been sued or placed for collection are all factors that CRM programs use to establish an appropriate credit limit for a consumer credit applicant. Fay Hansen in "Business Credit" reports that a few years ago ....."
Abstract This paper explains that the trading policies of Merrill Lynch depend on the integrated management of its client-driven accurate positions, together with the associated hedging and financing; moreover, several trading habits make Merrill Lynch susceptible to market, credit, liquidity, process and other threats, which are practical and need exhaustive controls and supervision. The author points out that where suitable, creditrisk alleviation methods comprise of the prerogative to need start-up collateral or margin, the privilege to cease transaction or get guarantees in case any untoward incidents happen, the prerogative to ask for the guarantee in the event when some exposure ceilings are crossed and the purchase of credit default safeguards. The paper stresses that, to respond in a better fashion to creditrisk management, Merrill Lynch needs guarantees mainly from U.S. government and agencies securities, on several derivative business deals.
From the Paper "Liabilities in favor of other brokers and dealers linked to outstanding dealings are booked at the amount for which the securities were purchased, and the deal is squared off on the receipt of the securities from other brokers or dealers. As regards long-standing securities failed-to-receive, Merrill Lynch might buy the basic security in the market and look for payback for losses from the counterparty. Merrill Lynch has time-tested policies and measures for extenuating credit risk on principal dealings, inclusive of appraisal and setting up ceiling for credit exposure, maintaining collateral, and persistently evaluating the creditworthiness of counterparties."
A study of the main categories of risk-- liquidity risk, interest rate risk, creditrisk and capital risk and how they can impact the viability of a financial institution.
Abstract One of the most fundamental objectives of bank management is maximizing shareholder value. To maximize shareholder value, bank managers must address the risk-return trade off inherent in many of their day-to-day financial transactions. This paper examines the different types of risk which fall into four main categories liquidity risk, interest rate risk, creditrisk, and capital risk and shows how crucial they are to maximizing shareholder value. Examples from real life bank figures are used to illustrate examples.
From the Paper "If a financial institution does not have enough liquid assets, then it is possible that a run on customer withdrawals could not be met. A common scenario in the Great Depression of the 1930?s, an inability to meet withdrawal demand can destroy the reputation of a financial institution. Carrying a disproportionately high liquidity risk has the potential to completely obliterate the good reputation of a financial institution, and ultimately result in the institution closing its doors."
Abstract This paper explains that the goal of its thesis is to conceive a model to manage the global interest rate risk of the commercial portfolio in order to determine the optimal structure of the new production and to test the tool on the Credit Foncier de Monaco, private banking and subsidiary of Calyon, which is obviously the investment banking of Credit Agricole. The paper's thesis is divided into two main sections: the theoretical modeling and the empirical application.
Table of Contents:
Abstract
Abbreviations
Introduction
Theoretical Modeling
Identification
Interest Rate
Nominal vs. Real Rate
Fixed vs. Variable Interest Rate
Short-Term vs Long-Term Rates
Spot vs. Forward Rates
Term Structure of Interests
Theories
Methods
Deterministic and Stochastic Models
Sources of Interest Rate Risk Repricing or Maturity Mismatch Risk Basis or Bid-Ask Spread Risk Yield Curve Risk Options Risk Interest Rate Exposure
Net and Gross Positions
Balance-Sheet & Gap
Profit and Loss Statement and Spread
Factors
Measurement
Volume
Instantaneous Gaps
Generalized Gaps
Indexed Gaps
Simulated Gaps
Value
Duration
Convexity
Market
Margin
Sensitivity
Modified Duration and Relative Convexity
Money Markets Rates
Management
Hedging And Speculation
Micro or Macro Hedging
Systematic or Selective Hedging
Partial and Total Speculation
Hedging Risk and Opportunity Cost
Passive and Active Hedging
Passive Hedging or Beta Management
Active Hedging or Alpha Management
Instruments
Spot
Forward And Future
Fra And Swaps
Options
Modeling
Utility
Structure
Utility Function
Constraints
Regulation
Commercial
Model
Objective Function
Efficient Portfolio
Optimal Portfolio
Empirical Application
Presentation
Cfm
Treasury
Asset-Liability Management (Alm) Committee
Adaptation
Structure
Constraints
Rates
Simulation
Leverage
Regulatory Constraints
Variance-Covariance Matrix
Utility
Variances
Conclusion
Glossary
Appendix: Balance-Sheet + Profit & Loss Statement
Appendix: Balance-Sheets by Currency, Maturity and Interest Rate
Appendix: Gaps
Appendix: Correlation and Variance-Covariance Matrix
Appendix: Weightings and Balance-Sheets in March 2008
Appendix: Coefficients of Variation
Appendix: Objective Function for Different Aversions to Risk
From the Paper "Taking into account the stock and constraints, the model determines the optimal allocation of the production for different scenarios of rates level, rates volatility and risk aversion degrees. The bank hedges against the interest rate risk by optimally adjusting its production.
"The optimal portfolio is the tangent point between the efficient frontier and the indifferent curve. It is obtained by equalizing the marginal rate of transformation (MRT) to the risk to return, which is the slope of the efficient frontier, and the marginal rate of substitution (MRS) to the risk to return, which is the slope of the objective function."
Tags: tool transformation, tangent point, risk premium, asset management
Abstract The paper discusses the number of risks associated with the banking industry. In an attempt to identify and minimize the various risks associated with the operation of this institution, the Bank of New York uses a Risk Management team. Their main goal is to identify and track the various risks associated with the Bank of New York and offer recommendations as to how to minimize or eliminate them. The paper shows how threats and risks in the banking industry can be divided into the following categories: Market Risk, CreditRisk, Foreign Asset Risk, Competition Risk, Governmental Risk, as well as risks to the physical structure and data systems. This paper discusses these risk areas and the Bank of New York's plan for minimizing them.
Table of Contents
Introduction
Risk Analysis
Threats/Risks - Market Risk CreditRisk Foreign Asset Risk Governmental Risk Competition Risk Analysis
Data Systems
Mitigation/Countermeasures
Information Assurance Policies
Disaster Recovery Policies
Summary
From the Paper "The World Trade tower attack in September of 2001 prompted the Bank of New York to re-evaluate and amend its disaster recovery policies. At the time of the disaster, the Bank had over 8,300 employees located in four lower Manhattan facilities who were evacuated in a matter of hours. The recovery plan was immediately implemented, and they temporarily relocated headquarters to midtown Manhattan. By that evening, they had relocated operating departments to five existing contingency sites in New Jersey, New York State, and Connecticut. Staff was reassigned to alternate sites as specified in disaster recovery plans while systems were restored at backup sites over the course of the following days. Well-executed contingency plans led to quick recovery of many businesses, including ADR, BNY Clearing, Core Custody, Brokerage, European Transfer Agency, Foreign Currency Transfer, Fund Accounting and Administration, Investment Management, Performance Measurement, Retail Fund Administration and Securities Lending (BNY annual report, 2001)."
Abstract This paper explains that online credit recovery programs are a way to insure optimum high school graduation by providing second-chance opportunities for students who have failed classes. The author describes a research project to assess the effectiveness of online credit recovery programs by comparing two online credit recovery programs: one implemented and designed by a commercial educational resource company, Aventa Learning, and another called the Georgia Virtual School under the auspices of the state of Georgia. The paper relates that weaknesses of this design is a shortage of currently available data, the probability of errors with only two programs being studied and the unreliability of former students answering opinion questions positively.
Table of Contents:
Introduction
Mixed Method Research Design
Integration of Data
Quantitative Validation and Qualitative Verification
Ethical Considerations and Role or the Researcher
Strengths and Challenges and Summary
From the Paper "In order to evaluate the success of both programs, researchers must rate them in terms of success rates in addition to graduation rates. In order to do this, researchers can conduct opinion polls of students taking the programs, asking them whether or not the material was easier to understand or moved at a better pace in the online programs as opposed to the courses they failed. Additionally, researchers must conduct tests five years after the students graduate in order to determine their success rate in terms of income, profession, and community involvement."
A paper that reviews database security risks and strategies in an internet world, focusing specifically on Certificate Authorities (CAs) and the specialized risks faced by CAs.
Abstract The paper shows that in today's fast paced economy and exploding computing infrastructure, database technologies have become the backbone of internet and application services. With adoption of technology comes risk and traditional attacks on security, with databases not being immune. This paper examines some of the risks, strategies and important aspects of database security as it pertains to deployments and Certificate Authorities.
Table of Contents:
Introduction
Nature of Security Issues
Common Attacks
The Threats
The Methods
SQL Server Attacks
SQL Injection Attacks
Oracle Exploits
Prevention
Process over Technology
Best Practices for Protecting Databases
Application Development
Design Considerations for Certificate Authorities
Data Protection
Data Availability
Conclusion
Additional Information
Sample Vulnerabilities
Certificate Authorities
Bibliography
From the Paper "Introduction The Internet has spawned a breeding ground for web applications and database systems to perform e-commerce, e-banking, and e-government transactions. Database systems have become an integral and required component of the Internet ecosystem to store security sensitive information. Since database systems are now the foundation for all sensitive data operations, database security has become increasingly important in not only e-commerce on the Internet, but also for conducting normal business operations for almost any organization. Compromise of database security poses new business risks not realized before in corporate IT systems."
Abstract This paper attempts to show, how given the present increase in world risk, the explanatory power of risk indices is of increasing importance. It looks at how the divergence findings of Hooper and Heaney (1999), Erb and Harvey (1996), and Cosset and Suret (1995) on market segmentation and mean reversion warrant investigation. It discusses how all three papers are thorough and exhaustive and still exhibit limitations in sample space, or their chosen time analysis. It also investigates the effect of financial risk on emerging market volatility and returns.
From the Paper "Mean reversion is a fundamental aspect of country risk. Erb and Harvey (1996) investigate the impact of mean reversion on financial markets. Their findings indicate a prominence of mean reversion in political indicators; however, find that evidence of mean reversion decreases in credit measures. This is likely due to the stabilizing influence of multinational corporations, as indicated by Heaney and Hooper (2002). Hooper and Heaney (1999) allude to this influence when commenting that there was little structural change over the period despite the observed volatility. On the other hand, Perotti and Oijen (1999) propose the that mean reversion can be circumvented by a market friendly government changing a country's institutional fundamentals. Nonetheless, there is largely a consensus, given no major structural shift, of the undeniable role of mean reversion in emerging markets."
This paper addresses the credit report, including how and why a credit report is important and exactly how the credit report can impact the individual.
1,900 words (approx. 7.6 pages), 4 sources, 2002, $ 71.95
Abstract This paper addresses the credit report, including how and why a credit report is important and exactly how the credit report can impact the individual. This paper provides information first on the appropriate steps necessary to acquire a full credit report, and the reasons the average consumer might wish to do so. This paper then investigates the scams that accompany credit and credit reports in order to better inform the reader of the problems that might occur in acquiring a credit report through non- official channels.
Tags: BUSINESS / FINANCE, ECONOMICS, ACCOUNTING, the credit report
Abstract This paper discusses credit derivatives in modern banking. The paper gives a brief outline of credit derivatives, and further discusses the concept of how they function within the global market. The paper examines occurrences within banking in relation to credit derivatives and how these events have affected the worldwide opinion regarding the limitations of these transactions. The paper draws conclusions from the research provided, and offers opinions for the future of credit derivatives in banking.
From the Paper "When the economy is stable and interest rates are low, banks traditionally struggle for profits because there is not a significant need for loans from consumers or big business. In these moments of financial peace, banks needed methods that would ensure they could survive independently on the downfall of the economy in order to remain solvent. Credit derivatives were born of such concern, allowing bankers, and others, the ability to reduce their risk by selling risk to other parties. Risk was still maintained by lending institutions, but the prospect of intense profit margins was the deciding factor for most banks to begin to participate in credit derivatives. The research will demonstrate that bank use of credit derivatives has been a recorded success, and that credit derivatives continue to grow across the globe as a boom to the banking industry. However, limitations do exist connected with credit derivatives."
Highlights the main reasons why membership in the Employee Federal Credit Union (EFCU) is shrinking and why individuals are opting for commercial banking when credit unions offer loans at lower rates.
Abstract This research report addresses the main reasons why EFCU has encountered a decline in membership and what is prompting people to borrow from other financial bodies. In order to better understand these reasons, however, the paper first looks at why people are initially attracted to credit unions instead of commercial banks and the principles that guide the growth of credit unions. The report is based on a survey of EFCU members, which was conducted through mailed questionnaires.
From the Paper "This has been a major setback for most federal credit unions including EFCU the number of its members has decreased and many existing members prefer commercial banks to meet their loan requirements. While the governmental regulations are certainly playing a dominant role in poor performance of credit unions in last few years, we must not forget how banking industry has persistently forced the government to develop such legislation. The worst part is that due to this persistent challenges, market share of credit unions came down to 12% in 1995 from 13% in 1980 while that of bans increased from 50 to 56% during these fifteen years."
Abstract This paper provides an extensive review of the recent literature relevant to pricing credit derivatives. The paper discusses new developments in credit derivative pricing and explains that these new developments are those innovations that expand or clarify the existing variations models for credit derivatives.
From the Paper "The purpose of this study is to review new developments in the pricing of credit derivatives. Credit derivatives, essentially insurance against credit risk through the structuring of and trading in of synthetic financial assets, are little more than a decade old. Thus, a skeptic might state that almost anything that occurs in the credit derivative market reflects a new development. The perspective providing the focus in this study however is that new developments are those innovations that expand or clarify the..."
Abstract This paper examines the issue of foreign tax credit for corporations under IRC section 901(b)(1). The paper first explains foreign direct investment in order that we may understand the relevant issues. The paper then gets into the specifics regarding tax credits and issues where these foreign investment companies are concerned.
Outline:
Chapter One - Introduction
Chapter Two - Review of Case and Ruling Issues
Chapter Three - Methodology
Chapter Four - Case and Ruling Analysis
Chapter Five - Summary, Conclusions, and Recommendations
From the Paper "The first limitation that is important to note is that there is so little information about the case study subject in question - the foreign tax credit. While there is indeed some information, much of it comes from laws and rulings as opposed to studies and research articles. With that in mind it is important to note where the information that is being collected for the study of this issue is coming from. There is no reason not to use the information that is provided by others, but making sure that one is aware of where it comes from and what potential consequences that could have is of utmost importance when it comes to looking at the limitations that can be found in research. Making sure that the most accurate data available is used is significant and when something cannot be verified it should be pointed out in the study that it cannot be verified so that there is no further confusion as to whether that piece of information is legitimate or not for the study."
Abstract This document discusses the marketing strategy of Metro Credit Union (MCU) and its options, focusing on issues such as branding, brand identity and positioning in a competitive environment. MCU is concerned about which market segments to pursue and how to pursue the one it targets. The paper concludes that MCU should pursue a technologically savvy and able online brand identity.
Abstract The paper shows that risk-taking is something common in all of us, but the degree to which it actually motivates us, may vary from person to person. The paper explains that people take risks for different reasons: Sometimes we are simply motivated by thrill of the unknown attached with risk-taking, sometimes we take a chance just to appear different and non-conforming and yet at other times we take risks because we just have to. The paper thus divides risks into three broad categories: Responsible, calculated risks; Risks for fun and irresponsible, harmful risks.
From the Paper "A study conducted by Beaty et al. (1996) explored the experiences of 23 female risk-takers in a city jail and discovered much to their chagrin that, ?Maintaining sexual relationships with men and obtaining drugs were higher priorities for most women than protection against HIV disease.? (Beaty et al., 1996) No wonder these women ended up in prison. Men and women, who lead a high-risk life where they frequently take negative irresponsible chances, end up ruining their lives. In our intimate relationships, we may often go for unprotected sex either to experience the thrill of it or simply because we are afraid to ask our partner to use condoms. Women in Beaty study are good examples of negative risk-taking and its disastrous consequences. Upon exploration of their sex life, it was discovered that these women were using sex as a tool to maintain intimate connection with their partner."
