The most comprehensive educational resources for finance

Simplicity, Risk Sensitivity and Comparability: The Regulatory Balancing Act

The is a speech given by Wayne Byres, the Secretary General at Basel Committee on banking Supervision. In his speech, Wayne Byres talks about finding the right balance for the amount of capital banks should keep as a part of Basel III norms – a suitable minimum amount of capital that was “just right” –

Margin Requirements for Non-centrally Cleared Derivatives – Updated

The Basel Committee on Banking Supervision and the International Organization of Securities Commissions (IOSCO) have today published a second consultative paper which represents a near-final proposal on margin requirements for non-centrally-cleared derivatives. The margin requirements for non-centrally cleared derivatives are articulated through key principles addressing eight (8) main elements: Appropriate margining practices should be in place

Understanding Global Liquidity

This paper explores the concept of global liquidity based on a factor model estimated using a large set of financial and macroeconomic variables from 24 advanced and emerging market economies. We measure global liquidity conditions based on the common global factors in the dynamics of liquidity indicators. By imposing theoretically motivated sign restrictions on factor

Reverse Stress Testing

Reverse stress testing is one of the hottest topics around the world in banking sector. Reverse stress testing is conducted as a complementary stress test along with other general stress tests. The key difference is that with a reverse stress test, the financial institution identifies the kind of scenarios that threaten the sheer survival of

Introduction to Reserve Ratios

In most countries, the central bank of the country, such as the Federal Reserve in the US, place reserve requirements in the form of cash reserve ratios on the commercial banks. Under the reserve requirements, each commercial bank is required to hold a certain portion of funds collected as deposits in the form of reserves.

Gobank: A New Bank Without Branches, Just an App

A new bank called Gobank is a new kind of checking account which operates just through a mobile app. It operates under the company Green Dot Bank and is planning to not open any branches for the bank. To operate your checking account all you have to do is to login into the app. The

Effective Risk Data Aggregation and Risk Reporting

The financial crisis that began in 2007 revealed that many banks, including global systemically important banks (G-SIBs), were unable to aggregate risk exposures and identify concentrations fully, quickly and accurately. This meant that banks’ ability to take risk decisions in a timely fashion was seriously impaired with wide-ranging consequences for the banks themselves and for

Credit Lending and Risk Management

In this presentation, made at GARP chapter meeting, Prof. Albert Ip provides a risk evaluation framework in credit lending. It discusses the general credit lending business practices, and then moves on to how risk can be managed in a credit portfolio.  

How Credit Card Transaction Processing Works?

This article explains how a credit card transaction is process using the example of VISA. Transaction processing involves the routing of payment information and related data to facilitate the authorization, clearing and settlement of transactions between Visa issuers, which are the financial institutions that issue Visa cards to cardholders, and acquirers, which are the financial

Why Do Firms Issue Bonds Abroad?

Corporate bond issuers in emerging economies in Asia have often had a choice between an onshore market and an offshore one. Since 1998, however, many of these issuers have increasingly turned to the onshore market. This paper provides lessons from onshore and offshore corporate bond finance in Asian emerging markets. It investigates systematically what factors