The Future of Finance (eBook)

A New Model for Banking and Investment

Moorad Choudhry, Gino Landuyt (Autoren)

eBook Download: PDF | EPUB

2010 | 1. Auflage
224 Seiten
John Wiley & Sons (Verlag)
978-0-470-90646-0 (ISBN)

Infos

New banking and investment business models to navigate the
post-financial crisis environment

The financial crisis of 2007-2008 has discredited business
models in the banking and fund management industries. In The
Future of Finance, Moorad Choudhry and Gino Landuyt argue that
banks must realign their business models, implying a lower
return-on-equity; diversifying their funding sources; and
increasing liquidity reserves. On the investment side, the authors
discuss how diversification did not reduce risk, but rather
amplified it, and failed to stabilize returns. The authors conclude
that the clear lesson from the crisis is to know one's risk. A
lesson that is best served by concentrating on assets and sectors
that you understand.

* Examines the weaknesses in the business models of many
institutions, as well as the theoretical foundation for
professionals in the field of finance

* Identifies the shortcomings of Modern Portfolio Theory

* Addresses how investment managers can find new strategies for
creating "alpha" and why they need to re-vamp their fee
structures

Filled with in-depth insights and practical advice, The
Future of Finance will provide bankers and investment managers
with a guide to realigning their businesses in order to prosper in
the post-crisis financial markets.

Autor

MOORAD CHOUDHRY has over twenty-one years experience in investment banking and was latterly head of treasury at Europe Arab Bank. He was previously head of treasury at KBC Financial Products and vice president in structured finance services at JPMorgan Chase Bank. Dr. Choudhry is Visiting Professor at the Department of Economics, London Metropolitan University, and Senior Research Fellow at the ICMA Centre, University of Reading. He is a Fellow of the ifs-School of Finance and a Fellow of the Chartered Institute for Securities and Investment. He is on the Editorial Board of the Journal of Structured Finance and the Editorial Advisory Board of American Securitization. GINO LANDUYTis Head of Sales at Conduit Capital in London. Prior to that, he was head of institutional structured sales at ING Bank in Brussels, and worked with KBC Bank N.V. in their Brussels, Frankfurt, New York, and London offices. Landuyt has an MA in applied economic sciences from the State University of Antwerp and an MBA from the Catholic University of Antwerp.

Inhalt

Foreword xi

Preface xiii

Introduction xix

Market Instability xx

Derivatives and Mathematical Modeling xxi

Senior Management and Staying in the Game xxiii

Macroprudential Financial Regulation and Cycle-Proof Regulation xxiii

The Way Forward xxv

Conclusion xxvi

Part One A Review of the Financial Crash 1

Chapter 1 Globalization, Emerging Markets, and the Savings Glut 3

Globalization 3

A Series of Emerging-Market Crises 5

Low-Yield Environment Due to New Players in the Financial Markets 8

Artificially Low Exchange Rates 15

Recommendations and Solutions for Global Imbalances 16

Chapter 2 The Rise of Derivatives and Systemic Risk 22

Systemic Risk 23

Derivative Market Systemic Risk: Solutions for Improvement 30

Chapter 3 The Too-Big-to-Fail Bank, Moral Hazard, and Macroprudential Regulation 37

Banks and Moral Hazard 37

Addressing Too-Big-to-Fail: Mitigating Moral Hazard Risk 42

Macroprudential Regulation: Regulating Bank Systemic Risk 53

Conclusion 58

Chapter 4 Corporate Governance and Remuneration in the Banking Industry 60

Bonuses and a Moral Dilemma 60

A Distorted Remuneration Model 61

Unsuitable Personal Behavior 64

Conclusion 65

Chapter 5 Bank Capital Safeguards: Additional Capital Buffers and Reverse Convertibles 67

Capital Issues in a Bear Market 67

Looking for New Capital Instruments 69

Chapter 6 Economic Theories under Attack 76

A Belief in Free and Self-Adjusting Markets 76

Modigliani and Miller 85

Markowitz and Diversification Tested 85

Minsky Once Again 88

Lessons to Be Learned by Central Banks 89

Conclusion 92

Part Two New Models for Banking and Investment 93

Chapter 7 Long-Term Sustainable Investment Guidelines 95

The Investment Landscape after the Crisis 95

Government Debt and Demographics 97

A New Economic Environment 103

The Inflation Dragon 105

Currencies and a Changing Geopolitical Landscape 115

Exchange-Traded Funds: A Flexible Asset Class 118

Conclusion 121

Chapter 8 Bank Asset-Liability and Liquidity Risk Management 123

Basic Concepts of Bank Asset-Liability Management 123

Asset and Liability Management: The ALCO 134

ALCO Reporting 137

Principles of Banking Liquidity Risk Management 142

Measuring Bank Liquidity Risk: Key Metrics 145

Internal Funding Rate Policy 151

Conclusion 157

Chapter 9 A Sustainable Bank Business Model: Capital, Liquidity, and Leverage 158

The New Bank Business Model 158

Corporate Governance 167

Liquidity Risk Management 168

The Liquid Asset Buffer 175

Conclusion 177

Notes 179

References 187

About the Authors 189

Index 191

Produkt-Details

• Erscheint lt. Verlag: 21.9.2010
• Reihe/Serie: Wiley Finance Editions
• Reihe/Serie: Wiley Finance Editions
• Sprache: englisch
• Themenwelt: Recht / Steuern ► Wirtschaftsrecht
• Themenwelt: Wirtschaft ► Betriebswirtschaft / Management ► Finanzierung
• Schlagworte: Finance & Investments • Finanz- u. Anlagewesen • Investments & Securities • Kapitalanlage • Kapitalanlagen u. Wertpapiere
• ISBN-10: 0-470-90646-4 / 0470906464
• ISBN-13: 978-0-470-90646-0 / 9780470906460