The most comprehensive educational resources for finance

How Banks Meet Customer Expectations

The relationship between company and customer is based on trust, particularly in the case of financial organizations. Customers seek financial products to save, invest or take risk. This relationship works in the backdrop of macro and micro conditions. Financial organizations like banks or investment houses can try and control micro conditions with meaningful customer oriented

Installment Loans: Tips to Understanding the Loan Agreement

When life throws you a financial curveball, bouncing back isn’t always that simple. Unexpected bills, a car repair, or a home repair can dig deep into your wallets. In circumstances such as these, many look to installment loans as a means for temporary financial relief. When taking out a loan, however, it is imperative that

What are Bitcoins?

Over the past few weeks the talk about bitcoins has been taking importance and almost every media publication is talking it. Some people are looking at it as the future of ecommerce, while others are pessimistic and think it’s just a bubble. So, what exactly are bitcoins and how you can also use them? In

ALM Overview – Dimensions of Risk Management for a Depository

This document provides an excellent overview of ALM and financial risk management in a Depository. The topics covered include: ALM background and framework Highlights in interest rate risk Regulatory perspective Case study: Appetite for interest rate risk Two measures of interest rate risk: NII and EVE Factors for setting risk limits ALM brings unification of

Perspectives on Liquidity Stress Testing (Iceland Example)

This reading is a part of the syllabus for FRM Part 2 Exam in the section ‘Current Issues in Financial Markets’. The global financial crisis revealed weaknesses in the stress testing exercises performed on financial institutions and systems around the world. These failures were most evident in the area of liquidity risk, where now-obvious vulnerabilities

Stress Testing Banks

This reading is a part of the syllabus for FRM Part 2 Exam in the section ‘Operational and Integrated Risk Management’. How much capital and liquidity does a bank need – to support its risk taking activities? During the recent (and still ongoing) financial crisis, answers to this question using standard approaches, e.g. regulatory capital

Observations and Developments in Risk Appetite Frameworks and IT Infrastructure

This reading is a part of the syllabus for FRM Part 2 Exam in the section ‘Operational and Integrated Risk Management’. The report summarizes the efforts of two SSG working groups to assess the progress that financial institutions have made in developing risk appetite frameworks and building robust information technology infrastructures. The observations in this

The Failure Mechanics of Dealer Banks

This reading is a part of the syllabus for FRM Part 2 Exam in the section ‘Operational and Integrated Risk Management’. In this paper, the author explains the key failure mechanics of large dealer banks, and some policy implications. This is not a review of the financial crisis of 2007–2009. Systemic risk is considered only

Practices and Issues in Economic Capital Frameworks

This reading is a part of the syllabus for FRM Part 2 Exam in the section ‘Operational and Integrated Risk Management’ Economic capital can be defined as the methods or practices that allow banks to consistently assess risk and attribute capital to cover the economic effects of risk-taking activities. It has increasingly become an accepted

Risk Measurement for the Trading Book

This reading is a part of the syllabus for FRM Part 2 Exam in the section ‘Market Risk Measurement and Management’. This report summarises the findings of an ad hoc working group that reviewed the academic literature relevant to the regulatory framework for the trading book. This project was carried out in the first half