Bank Risk Management in Developing Economies

Addressing the Unique Challenges of Domestic Banks
 
 
Academic Press
  • 1. Auflage
  • |
  • erschienen am 4. Oktober 2016
  • |
  • 668 Seiten
 
E-Book | ePUB mit Adobe DRM | Systemvoraussetzungen
E-Book | PDF mit Adobe DRM | Systemvoraussetzungen
E-Book | ePUB mit Adobe DRM | Systemvoraussetzungen
978-0-12-809359-7 (ISBN)
 

Bank Risk Management in Developing Economies: Addressing the Unique Challenges of Domestic Banks provides an up-to-date resource on how domestically-based banks in emerging economies can provide financial services for all economic sectors while also contributing to national economic development policies.

Because these types of bank are often exposed to risky sectors, they are usually set apart from foreign subsidiaries, and thus need risk models that foreign-based banks do not address. This book is the first to identify these needs, proposing solutions through the use of case studies and analyses that illustrate how developing economic banking crises are often rooted in managing composite risks. The book represents a departure from classical literature that focuses on assets, liabilities, and balance sheet management, by which developing economy banks, like their counterparts elsewhere, have not fared well.


  • Contains fifty cases that reinforce risk management best practices
  • Provides a consistent chapter format that includes abstract, keywords, learning focus, and outcomes
  • Summaries, questions, and glossaries conclude each chapter


Leonard Onyiriuba is a leading banker and author on banking. He started a career in banking in 1991 after a stint as a lecturer in the university. As a banker, he was at various times group head (commercial banking), regional director (Lagos), and divisional director (corporate banking). He currently runs a financial consultancy in Lagos, Nigeria - with a commitment to helping clients succeed. His books include 'Analyzing and Managing Risks in Bank Lending" (2004), 'Drive and Tasks in Bank Marketing" (2008), 'Dictionary and Language of Banking" (2010), 'Credit Risk: Taming a Hotbed of Reckless Banking" (2013), and 'Banking Processing Risks and Control" (2014).
  • Englisch
  • San Diego
  • |
  • USA
Elsevier Science
  • 7,27 MB
978-0-12-809359-7 (9780128093597)
0128093595 (0128093595)
weitere Ausgaben werden ermittelt
  • Cover
  • Title page
  • Copyright page
  • Dedication
  • Contents
  • Preface
  • Background
  • Overview and target audience
  • Structure and orientation of the book
  • Benefits to target audience
  • Unique selling points
  • Part I - Background and Overview
  • Chapter 1 - Risk, Uncertainty, and Banking Dynamics in Developing Economies
  • Learning focus and objectives
  • Expected learning outcomes
  • Overview of the subject matter
  • Distinguishing domestic banks from foreign banks subsidiaries
  • Realistically distinguishing domestic from foreign subsidiary banks
  • Conceptualizing and defining risk and uncertainty
  • Summary
  • Questions for discussion and review
  • References
  • Further readings
  • Chapter 2 - Perspectives on Predisposition of Banking to Risk in Developing Economies
  • Learning focus and objectives
  • Expected learning outcomes
  • Overview of the subject matter
  • Common, but varying intensity of, proneness of banking to risk
  • Factors of general predisposition of banking to risk
  • Bank as Depository for Money
  • Cash as Bank Inventory
  • Insider Infidelity and Abuse
  • Money Dealing-Staking Other People's Money
  • Tendency to Overtrading
  • Taking on Financing and the Risks of Borrowers
  • Incidence and Complexities of Banking Frauds
  • Gaps in Adoption of Rules of Best Practice
  • Social Glorification of Wealth
  • Mitigating the intensity of the risk-proneness of domestic banks
  • Summary
  • Questions for discussion and review
  • References
  • Part II - Paradigm Shift, Concerns, and Insights
  • Chapter 3 - Banking Revolution, Paradigm Shift, and Risk Management in Developing Economies
  • Learning focus and objectives
  • Expected learning outcomes
  • Overview of the subject matter
  • Anticipation, buildup, and dynamic of revolution in banking
  • Welcome, skepticism, and concern about banking revolution in developing economies
  • Creation, nature, and dynamics of novel risks in banking revolution
  • Internet Fraud (General)
  • Phishing
  • Cybercrime
  • Cards Fraud
  • Mechanisms of novel risks in banking revolution
  • Hacking into Computers and Databases
  • Cloning Smartcard Chips and Websites
  • Theft of Identities of Bank Customers
  • Mitigating risks of revolution in banking
  • Bank Management's Roles in Novel Risks Control
  • Customer Education
  • Security of Bank Websites
  • Encryption of Data and Files
  • Adoption of Unique Banking Codes
  • Summary
  • Questions for discussion and review
  • References
  • Chapter 4 - Enterprise Risk Management-A Paradigm Shift and Applications in Banking
  • Learning focus and objectives
  • Expected learning outcomes
  • Overview of the subject matter
  • Managing risks in domestic and foreign subsidiary banks
  • Life cycle of risk management process in banking
  • Defining Risk Control Contexts
  • Identifying Potential Risks
  • Analyzing Risk Events and Issues
  • Mitigating Impacts of Risks
  • Monitoring and Feedback
  • ERM concept-a paradigm shift and applications in banking
  • ERM hallmarks and strict applications in banking
  • ERM functions and significance in banking
  • Builds and Broadens Risk Consciousness
  • Enhances Risk Sensitivities
  • Institutionalizes Risk Culture
  • Maximizes Opportunities
  • Anticipates Risk Events
  • Optimizes Resources
  • Summary
  • Questions for discussion and review
  • Reference
  • Chapter 5 - Strategy, Paradigm Shift, and Positioning for Business and Risk Management in Banking
  • Learning focus and objectives
  • Expected learning outcomes
  • Overview of the subject matter
  • Retail banking focus, risks, and mechanisms of control
  • Branch banking, coordination, and risks control
  • Wholesale banking and mechanisms of risk control
  • Blue-Chip Companies
  • Private Sector Driven
  • Sales Turnover and Activities
  • Formal Organization Structure
  • Good and Focused Management
  • Realistic Business Strategy
  • Financial Accounts and Reporting
  • Cultural issues and prospects in bank positioning
  • Evolving and Sustaining Banking Culture
  • Role of Subcultural Values
  • Supplanting the Unorthodox Banking Practices
  • Survival of the Unorthodox Banking Systems
  • Summary
  • Questions for discussion and review
  • References
  • Chapter 6 - Bank Marketing Paradox and Risks Management in Developing Economies
  • Learning focus and objectives
  • Expected learning outcomes
  • Overview of the subject matter
  • Risk control need for marketing in banking
  • Customer Satisfaction
  • Growth Potential
  • Nature of Services
  • Budget Pressure
  • Cultivation of Market
  • Competition
  • Avoiding the pitfalls of marketing calls
  • Integrating customer needs with marketing goals
  • Managing risk through prebanking marketing research initiative
  • Cultivating stakeholders in banking for marketing risks control
  • Mitigating banking risks through relationship marketing
  • Internal risk-mitigating information for effective bank marketing
  • Bank-Related Marketing Information
  • Background Information
  • Financial Analysis and Standing
  • Branch Locations and Policies
  • International Offices and Affiliations
  • Operational Policies and Guidelines
  • Goodwill and Reputation
  • External risk-mitigating information for effective bank marketing
  • Prospects for the future
  • Summary
  • Questions for discussion and review
  • Reference
  • Section A - Public Concern and Outcry
  • Chapter 7 - Risk, Safety, and the Future of Deposit Money Banks in Developing Economies
  • Learning focus and objectives
  • Expected learning outcomes
  • Overview of the subject matter
  • Safeguarding banks against interrelated risks in developing economies
  • Situating risk and safety of deposit money banks in developing economies
  • Risk-safety divide across domestic and foreign subsidiary banks
  • Measures of risk and safety of deposit money banks in developing economies
  • Summary
  • Questions for discussion and review
  • References
  • Chapter 8 - Money Laundering Links with Bank Risks and Management in Developing Economies
  • Learning focus and objectives
  • Expected learning outcomes
  • Overview of the subject matter
  • Meaning and domestic-foreign subsidiary banks links
  • Money laundering dynamics and links with corruption
  • Corruption and Money Laundering Tendencies
  • Mechanisms of Corruption and Money Laundering
  • Economic and business policies vis-à-vis check on money laundering
  • Detecting and forestalling money laundering in bank accounts
  • Know Your Customer Rules
  • Obtain Identification Evidence
  • Ascertain Nature and Level of Business
  • Establish True Identity of Customers
  • Adopt Proven Identification Process
  • Certify Identification Documents
  • Risk-based laws and regulations against money laundering
  • Summary
  • Questions for discussion and review
  • References
  • Chapter 9 - Bank Crisis, Distress Syndrome, and Failure Risk Management in Developing Economies
  • Learning focus and objectives
  • Expected learning outcomes
  • Overview of the subject matter
  • Framework for solving domestic banks crisis, distress, and failure
  • Historical Evidence
  • Defining the Problem
  • Discredited Practices
  • Anticipating Distress
  • Anticipating and analyzing domestic banks' distress syndrome
  • Solving domestic banks' crisis, distress, and failure risks
  • Management Problems
  • Fraudulent Practices
  • Assets Deterioration
  • Poor Capitalization
  • Weak Earnings Capacity
  • Rising Cost of Funds
  • Adverse Policy Changes
  • Detecting early warning signs of domestic banks' distress
  • Summary
  • Questions for discussion and review
  • References
  • Chapter 10 - Banking Quirks, Regulatory Responses, and Supervision in Developing Economies
  • Learning focus and objectives
  • Expected learning outcomes
  • Overview of the subject matter
  • Banking regulatory authorities in developing economies
  • The Presidency-in Democratic Governments
  • Central Bank of Nigeria
  • Nigerian Deposit Insurance Corporation
  • Legal instruments and challenges of banking regulation and supervision
  • The Observed Challenges and Implications
  • Defining issues in banking quirks and regulation in developing economies
  • Autonomy for banking regulatory authorities
  • Albatross for banking supervision in developing economies
  • Regulatory responses to failing banks in developing economies
  • Moral Suasion
  • Holding Actions
  • Assumption of Control
  • Acquisition, Revocation of License, or Liquidation
  • Summary
  • Questions for discussion and review
  • References
  • Section B - New Insights and Concerns
  • Chapter 11 - Country Risk of Banking in Fledgling Economies Mired in Slippery Political Terrain
  • Learning focus and objectives
  • Expected learning outcomes
  • Overview of the subject matter
  • Local populace disillusioned with politics
  • Ethnic foundation of the polities
  • Alien political models, structures, and norms
  • Military intervention in politics
  • Politicized versus apolitical civil service
  • Questionable, illegitimate, and ineffectual regimes
  • Terrorism, guerrilla, and civil wars
  • Summary
  • Questions for discussion and review
  • References
  • Further readings
  • Chapter 12 - Public Sector Banking Analysis and Risks Management in Developing Economies
  • Learning focus and objectives
  • Expected learning outcomes
  • Overview of the subject matter
  • Significance and business orientation of public sector
  • Framework of public sector banking analysis
  • Size and Composition of Public Sector
  • Sources of Government Revenue
  • Government Expenditure Profile
  • Banking potential of the public sector
  • Role and Influence of Public Sector
  • Liquidity Boosting Capabilities
  • Management of Domestic Funds
  • Management of External Reserves
  • Financing of Public Sector Projects
  • Characterizing public sector banking
  • Confidentiality of Transactions
  • Caliber of Marketing Personnel
  • Personal Attribute of Endurance
  • Extensive Personal Network
  • Routine Transactions, Traditional Products
  • Publicity of Public Sector Transactions
  • Irregular Work Schedules
  • Summary
  • Questions for discussion and review
  • Reference
  • Chapter 13 - Bank Strategic Business Units Planning, Marketing and Risk Management
  • Learning focus and objectives
  • Expected learning outcomes
  • Overview of the subject matter
  • Meaning and overview of business planning in banking
  • Strategy versus planning for banking business and risk management
  • Need for clear bank business planning directives
  • Preparation and components of banking business plan
  • Executive Summary
  • Review of Previous and Current Years
  • Situation Analysis
  • Office Location
  • The Market
  • Business Potential
  • Competition
  • Strengths
  • Weaknesses
  • Opportunities
  • Threats
  • Business Objectives
  • Strategy Statement
  • Assets Creation Versus Liabilities Generation Focus
  • Pool Funds Uses Versus Sources
  • Quality of Risk Assets
  • Action Programs
  • Financial Aspects and Projections
  • Important Assumptions
  • Critical Success Factors
  • Presentation problems and tips for SBU managers
  • Approval of banking business plan
  • Monitoring and control of banking business plans
  • Summary
  • Questions for discussion and review
  • Reference
  • Chapter 14 - Bank Governance Pitfalls, Failings, and Risk Management in Developing Economies
  • Learning focus and objectives
  • Expected learning outcomes
  • Overview of the subject matter
  • Integrating corporate objectives with personal goals
  • Tendency to personal governance in banking
  • Dictatorial Chief Executives as Albatross for Banks
  • Consolidating risk control resources for bank governance
  • Bank members, governance, and stakes in banking
  • Shareholders' Expectations
  • Earnings
  • Capital Gains
  • Dividend
  • Net Worth
  • Bank Employees
  • Risk-based approach to motivating bank workforce
  • Bank managements as risk-bearing corporate leaders
  • Risk control lessons of situation-based leadership for bank managements
  • Forces in the Leader
  • Forces in the Subordinates
  • Forces in the Situation
  • Risk control lessons of contingency-based leadership for bank managements
  • Summary
  • Questions for discussion and review
  • References
  • Further reading
  • Part III - Reinventing Risk Management
  • Section A - Credit Risk
  • Chapter 15 - Bank Credit Risk Issues and Management Requirements in Developing Economies
  • Learning focus and outcomes
  • Expected learning outcomes
  • Overview of the subject matter
  • The state of banks lending and credit risk crisis in developing economies
  • Bank credit risk peculiarities of developing economies
  • Overambitious Budget Goals
  • Turbulent Times
  • Culprits for bank credit risk crisis in developing economies
  • Reckless Bank Lending
  • Excessive Risk-Taking in Bank Lending
  • Illegal Lending and Credit Fraud
  • Insider Abuse
  • Management structure for bank credit risk management
  • Credit Strategy Committee
  • Watch-List Committee
  • Relating credit risk to bank capitalization in developing economies
  • Bank credit risk perspective and implications of the Basel capital accord
  • Constituents of Capital
  • Core Capital (Basic Equity)
  • Supplementary Capital
  • Undisclosed Reserves
  • Revaluation Reserves
  • General Loan Loss Reserves
  • Hybrid (Debt/Equity) Capital Instruments
  • Subordinated Term Debt
  • Deductions From Capital
  • Risk-Weighting System
  • Elements of the Weighting Structure
  • Risk Categories
  • The Risk Weights
  • Credit Risk Management Implications of the Risk-Weighting System
  • Summary
  • Questions for discussion and review
  • References
  • Chapter 16 - Bank Assets Portfolio Structure and Risk Management in Developing Economies
  • Learning focus and objectives
  • Expected learning outcomes
  • Overview of subject matter
  • Theories of assets management in banking
  • The Pool-of-Funds Theory
  • Funding Priority
  • Primary Reserves
  • Secondary Reserves
  • Other Asset Uses
  • Praise and Criticisms of Pool-of-Funds Theory
  • Assets Allocation Model
  • Critical Evaluation of Assets Allocation Model
  • Elements and composition of bank assets portfolio
  • Cash Items
  • Short-Term Funds
  • Marketable Securities
  • Investments
  • Fixed Assets
  • Loans and Advances
  • Credit concentration and risk management in developing economies
  • Credit portfolio distribution, maturity profiles, and risk management
  • Summary
  • Questions for discussion and review
  • Reference
  • Chapter 17 - Sensitizing Bankers in Developing Economies to Securitization Risks and Management
  • Learning focus and objectives
  • Expected learning outcomes
  • Overview of the subject matter
  • Simplifying the concept of securitization
  • Objectives and uses of securitization
  • Unlocking Funds Tied up in Loans
  • Optimizing Income and Returns
  • Mitigating Credit Risk
  • Creating Alternative Cash Flow Source
  • Managing the Balance Sheet
  • Tapping into Opportunities
  • Funding New Investments
  • The workings and dynamics of loan securitization
  • Parties to Loan Securitization
  • Obligors
  • Originator
  • Special Purpose Vehicle
  • Investors
  • Administrator or Servicer
  • Documentation and Rating of Securities
  • Significance and applications of securitization
  • Summary
  • Questions for discussion and review
  • References
  • Chapter 18 - Credit Ratings Prospects and Practicalities for Banking in Developing Economies
  • Learning focus and outcomes
  • Expected learning outcomes
  • Overview of the subject matter
  • Meaning and scope of credit rating
  • Purposes of credit ratings
  • Credit scoring for consumer lending
  • Credit rating prior to Basel II-from the perspective of developing economies
  • Effect of Basel II on credit rating
  • Credit rating methods approved by Basel II
  • Standardized Approaches
  • Simple Standardized Approach
  • Standardized Approach
  • Eligibility of ECAIs
  • Objectivity
  • Independence
  • International Access
  • Transparency
  • Disclosure
  • Resources
  • Credibility
  • Internal Ratings-Based Approaches
  • Foundation IRB Approach
  • Advanced IRB (A-IRB) Approach
  • Conditions for IRB Approaches
  • Standardized Versus IRB Approaches
  • Risk control implications for banking in developing economies
  • Summary
  • Questions for discussion and review
  • Section B - Liquidity Risk
  • Chapter 19 - Bank Balance Sheet and Liquidity Risk Management in Developing Economies
  • Learning focus and outcomes
  • Expected learning outcomes
  • Overview of the subject matter
  • Identifying and mitigating bank balance sheet and liquidity risks
  • Liquidity Demands of Risk Aversion
  • Mitigating Exposure to Systemic Risk
  • Balancing Assets Against Liabilities
  • Checking Risk in Funding Assets
  • Relating Credits and Deposits Terms
  • Insights into Loan to Deposit Ratio
  • Solving bank capitalization-induced balance sheet and liquidity risks
  • Regulating and measuring adequacy of bank capitalization
  • Startup or Base Capital
  • Single-Obligor Limit
  • Weighted Risk Assets Ratio
  • Bank liquidity issues, measures, and risk management in developing economies
  • Loan-to-Deposit Ratio
  • Merits of Loan-to-Deposit Ratio
  • Shortcomings of Loan-to-Deposit Ratio
  • Cash Reserve Ratio
  • Merits of Cash Ratio
  • Shortcomings of Cash Ratio
  • Liquidity Ratio
  • Justification of Liquidity Ratio
  • Weakness of Liquidity Ratio
  • Summary
  • Questions for discussion and review
  • Further readings
  • Chapter 20 - Bank Liabilities Portfolio and Liquidity Risk Management in Developing Economies
  • Learning focus and objectives
  • Expected learning outcomes
  • Overview of the subject matter
  • Conceptualizing liquidity in the context of banking
  • Meaning of liquidity
  • Liquidity of assets
  • Liquidity of a bank
  • Measuring liquidity of a bank
  • Integrating cashflow with mitigation of bank liquidity and funding risks
  • Spreadsheet applications in bank liquidity and funding risks management
  • Input from Financial Control Input
  • Liabilities generation and build-up as bank funding strategies
  • Deposit
  • Demand Deposit Account
  • Observed Drawbacks
  • Benefits to the Bank
  • Savings Deposit Account
  • Time Deposits
  • Call Deposit
  • Fixed Deposit
  • Float-Oriented Account
  • Monitoring and staving off the factors of liabilities portfolio risks
  • Summary
  • Questions for discussion and review
  • Reference
  • Further readings
  • Chapter 21 - Bank Liquidity Crisis and Funding Risk Management in Developing Economies
  • Learning focus and outcomes
  • Expected learning outcomes
  • Overview of the subject matter
  • Regulatory and theoretical challenges of bank liquidity management
  • Commercial credit and lending perspectives on bank liquidity risk
  • Import of Self-Liquidating Loans
  • Limitations and Implications
  • Neglect of Needs of Growing Economies
  • Fallacy of Self-Liquidating Loans
  • Possible Stability of Deposit Base
  • Irrelevant During Business Lull
  • Switching assets in grappling with challenges of bank liquidity
  • Eligibility of Securities
  • Merits and Demerits of Asset-Switching
  • Anticipating income from loans to mitigate bank liquidity risk
  • Shortcomings and Criticisms
  • Liability-management liquidity theory-evolving issues and perspectives
  • Shortcomings and Implications
  • Bank treasury crisis in developing economies
  • Management structure for bank liquidity risk management
  • Executive Committee
  • Credit Strategy Committee
  • Assets and Liabilities Committee
  • Summary
  • Questions for discussion and review
  • References
  • Further reading
  • Chapter 22 - Macroeconomic Challenge of Liquidity Risk for Banking in Developing Countries
  • Learning focus and objectives
  • Expected learning outcomes
  • Overview of the subject matter
  • Macroeconomic management issues in developing economies
  • Monetary policies bearing on banking risks and control
  • Monetary Policy Goals and Controls
  • Bank risk fallout of indirect instruments of monetary policy
  • Open Market Operation
  • Meaning and Purpose
  • Differentiating OMO Markets
  • Major OMO Participants
  • The Central Bank
  • Discount Houses
  • Authorized Dealers
  • Instruments of OMO Transactions
  • Procedure for OMO Dealing
  • Significant OMO Benefits
  • Risk Implications of OMO for Banks
  • Reserve Requirements
  • Discount Window Operation
  • Moral Suasion
  • Bank risk implications of direct instruments of monetary policy
  • Debt burden, crisis, and fiscal policy impact on banking risks and control
  • Quality and Applications of Borrowing
  • Rethinking the Purpose of Borrowing
  • Suspect Criteria of Lending to Government
  • Revisiting the Causes of Foreign Borrowing
  • Market liquidity determinants and interest rate risk in banking
  • Summary
  • Questions for discussion and review
  • References
  • Section C - Market Risk
  • Chapter 23 - Market Risk, Interest Rates and Bank Intermediary Role in Developing Economies
  • Learning focus and objectives
  • Expected learning outcomes
  • Overview of the subject matter
  • Assessing the role of banks as intermediaries in financial markets
  • Concepts and applications of market risk in banking
  • Interest Rate Risk
  • Foreign Exchange Risk
  • Situating market risk of banking in volatile sources and cost of funds
  • Factors underlying market risk in banking
  • Size of Capital Funds for Banking
  • Risk-Return Trade-Off
  • Deposits Liabilities Base
  • Monetary Policies and Control
  • Prevailing Economic Conditions
  • Regulatory Maneuverings
  • Market risk fallout of flaws in monetary policy and management
  • Summary
  • Questions for discussion and review
  • References
  • Chapter 24 - Foreign Exchange Markets and Triggers for Bank Risk in Developing Economies
  • Learning focus and objectives
  • Expected learning outcomes
  • Overview of the subject matter
  • Background to foreign exchange intricacies in developing economies
  • Foreign exchange management process and policy implications
  • Foreign currency markets and risk management
  • Forms of Foreign Currency Markets
  • Central Bank (Interbank) Market
  • Autonomous Market
  • Market deals, process, and risk management
  • Spot Transactions
  • Forward Contracts
  • Swap Deals
  • Option Deals
  • Interbank Placements
  • Interbank dealing process, risks, and management
  • Primary Dealing Rules
  • Mode of Trading
  • Two-Ways Quoting System
  • Dealer's Word is Their Bond
  • Confirmation of Deals
  • Elements of Transactions
  • Amount Traded
  • Settlement Risk
  • Currencies and Rates Quotes
  • Dealing arrangements and risk management
  • FX Commitments and Margins
  • Value-Dating Deals
  • Determining Spreads
  • Obligation to Quote
  • Settlement of Deal
  • Default and Remedial Action
  • Rights and Obligations of the Dealers
  • Foreign exchange risks beckoning for banks in developing economies
  • Challenge of autonomous markets for bank FX risks management
  • Summary
  • Questions for discussion and review
  • References
  • Further readings
  • Chapter 25 - Money Market Workings, Instruments, and Bank Risk in Developing Economies
  • Learning focus and objectives
  • Expected learning outcomes
  • Overview of the subject matter
  • Defining and characterizing money markets in developing economies
  • Major money market players in developing economies
  • Central Bank
  • Authorized Dealers
  • Nonbank Financial Institutions
  • Deposit Insurance Corporation
  • Importers
  • Exporters
  • Borrowers in Domestic Currency
  • Depositors in Domestic Currency
  • Speculators
  • Sundry Other Participants
  • Domestic currency instruments of money markets
  • Cash and Short-Term Funds
  • Treasury Deposits and Certificates
  • Interbank Placements
  • Treasury Bills
  • Open-Buy-Back
  • Repurchase Agreement
  • Central Bank's Advances to Banks
  • Credit Products and Facilities
  • Commercial Bills and Acceptances
  • Commercial Papers
  • Bankers' Acceptances
  • Bank Guarantee
  • Foreign currency instruments of the money market
  • Domiciliary Accounts
  • Export Proceeds
  • Government FX Funds
  • Personal FX Funds
  • Foreign Currency Loans
  • Letters of Credit
  • Dealing procedures, terms, and risk management
  • Accreditation of Dealers
  • Standard Dealing Hours
  • Dealing Procedure
  • Mode of Communication
  • Currency for Trading
  • Amounts Traded
  • Tenor of Transactions
  • Deals Confirmation Process
  • Delivery of Instruments
  • Settlement of Deal and Risk
  • Notice of Termination of Transaction
  • Termination of Transaction
  • Rollover of Transactions
  • Disputes and Misunderstandings
  • Summary
  • Questions for discussion and review
  • Reference
  • Chapter 26 - Capital Market Dynamics, Securities, and Bank Risk in Developing Economies
  • Learning focus and objectives
  • Expected learning outcomes
  • Overview of the subject matter
  • Defining and appreciating the significance of capital markets
  • Characterizing capital markets in developing economies
  • Primary Market
  • Secondary Market
  • Bonds Market
  • Distinguishing Features of Bonds
  • Major players and participants in capital markets in developing economies
  • SEC, Market regulation, and risk management
  • Stock Exchange-investor watch dog and hub of transactions in securities
  • Domestic currency instruments of the capital market
  • Ordinary Shares
  • Preference Shares
  • Debenture Stocks
  • Equity Versus Debt as Domestic Currency Instruments
  • Foreign currency instruments of the capital market
  • FX Futures Contract
  • Differentiating Futures from Option
  • Comparing Futures with Forward Contracts
  • Boom to bust mechanisms of capital market risks in developing economies
  • Summary
  • Questions for discussion and review
  • Section D - Operational Risk
  • Chapter 27 - Bank Operational Risk Dynamics and Management in Developing Economies
  • Learning focus and objectives
  • Expected learning outcomes
  • Overview of the subject matter
  • Defining operational risk and its applications in banking
  • Nuances of operational risk dynamics and interactions
  • Industry and Operational Risk Interaction
  • Interaction Between Business and Operational Risk
  • Linking Financial Risk with Operational Risk
  • Market Risk Interface with Operational Risk
  • Interface between liquidity and operational risk
  • Summary
  • Questions for discussion and review
  • Reference
  • Chapter 28 - Bank Work, Employees, and Operational Risk Management in Developing Economies
  • Learning focus and objectives
  • Expected learning outcomes
  • Overview of the subject matter
  • Operational risk in negative work disposition
  • Pressure of work vis-à-vis operational risk in banking
  • Operational risk in lack of enthusiasm for work
  • Disturbing Family Pressures
  • Upset of Personal Goals
  • Low Work and Service Morale
  • Dissatisfaction with Work
  • Loss of Faith in Self and Employment
  • Risk-determining interface between business and operations banking
  • A Split Spurred by Risk Considerations
  • Facing up to risk and disabusing employees of notions of bias
  • Taming business banking with risk-based controls
  • Risk-based approach to empower business managers
  • Managerial response to employee situations
  • Handling difficult employees and customers
  • Summary
  • Questions for discussion and review
  • Reference
  • Chapter 29 - Banking Processing and Operational Risk Management in Developing Economies
  • Learning focus and objectives
  • Expected learning outcomes
  • Overview of the subject matter
  • An insight into operational risks of banking in developing economies
  • Operational risks in banking transactions processing
  • Errors and Risks in Transactions Processing
  • Omission of Entries
  • Spurious, or Contrived, Entries
  • Wrong Entries
  • Usual Causes of Processing Errors
  • Employee Carelessness
  • Confusing Transactions
  • Wrong Assumptions
  • System Failure
  • Ignorance of Customers
  • Measuring Transactions Processing Errors
  • Effects of Transactions Processing Errors
  • Tainting of Integrity
  • Straining of Banking Relationship
  • Mutual Recriminations
  • Burden of Accounts Reconciliation
  • Loss of Confidence
  • Employee Appraisal Issue
  • Incidence of Fraud
  • Control Implications
  • Control of Transactions Processing Errors
  • Employee Training
  • Call-Over of Transactions
  • Stemming Posting Biases
  • Correcting Criticized Work Attitudes
  • Assurance of Customer Satisfaction
  • Risks and controls in paying and clearing checks
  • Checks Lodged in Savings Account
  • Crossed Check Paid Over-the-Counter
  • Honoring Stopped Check
  • Non or Wrong Confirmation of Check
  • Non or Wrong Verification of Signature
  • Paying Third Party Check
  • Releasing Checkbook to a Third Party
  • Suppression of Check
  • Unauthorized Access to Account Balance
  • Wrong Sorting of Checks
  • Stemming operational risks through reconciliation of accounts
  • Interbranch Accounts
  • Call-Over of Transactions
  • Control or Mirror Accounts
  • Mirror Account
  • Nostro Account
  • Vostro Account
  • GL Reviews and Proofs
  • Vault Cash
  • Summary
  • Questions for discussion and review
  • Chapter 30 - Banking Frauds and Operational Risk Management in Developing Economies
  • Learning focus and objectives
  • Expected learning outcomes
  • Overview of the subject matter
  • Defining fraud and its connotations in banking
  • Insights into fraud-driven operational risk in banking
  • Tracing the root causes of frauds in banking
  • Society and Negation of Moral Values
  • Upbringing, Background, and Lifestyle
  • Internal Bank Workings and Controls
  • Dysfunctional Legal Frameworks
  • Dynamic and psychology of banking fraud
  • Inside Job-Characteristics, Dynamic, and Stakes
  • Fraud From the Outside-First Principles and Build-Up
  • Collusion for Fraud-Enlisting Connivance of an Accomplice
  • Profiling banking fraudsters and putting their acts into perspective
  • Lone Fraudster
  • Fraud Syndicate
  • Fraud Accomplices
  • Deciding and applying instrument of fraud
  • Dealing with frauds in banking-an administrative emphasis
  • Current Approaches to Fraud Control
  • Regular Fraud Control Measures
  • Supplementary Inputs into Fraud Control
  • Integration of Ancillary Fraud Control Measures
  • Complementary Approaches to Fraud Control
  • Reinventing Bank-Employee Organic Relationship
  • Evolving a Workable Solution to the Scourge of Frauds
  • Risk Management Implications of the Complementary Approaches
  • Welfare and Compensation Packages
  • Motivation of the Employees
  • Fair Treatment of the Employees
  • Equitable Employees Reward System
  • Making Career in Banking Pensionable
  • Summary
  • Questions for discussion and review
  • Index
  • Back cover

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