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Summary Risk Management in Banking
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Summary of the book chapters of Foundations of financial Risk for Risk management in Banking
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Summary foundations of financial risk with multiple choice questions
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Foundations of Financial Risk
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By: jamilakarakotova • 4 weeks ago
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Summary RMBRisk Management in Banking
2023/2024
Chapter 1....................................................................................................................................................... 3
Chapter 2....................................................................................................................................................... 6
,Chapter 3....................................................................................................................................................... 8
Chapter 4..................................................................................................................................................... 11
Chapter 5..................................................................................................................................................... 18
Chapter 6..................................................................................................................................................... 21
Chapter 7..................................................................................................................................................... 26
Chapter 8..................................................................................................................................................... 29
, Chapter 1
Banks offer three core banking services
Deposit collection
Payment arrangement
Loan underwriting
Financial services offered by banks
Cash management handle cash collection and payments for a
company and invest any temporary cash surplus
Asset management brokerage services (buying and selling
securities) and investment banking (advising as well as offering
financing options)
Risk management
Banks play central role in facilitating economic activity through:
Financial intermediation channel savings from depositors to
borrowers
Asset transformation create loans from deposits
Money creation through financial intermediation and asset
transformation
Deposit collection
Accepting cash or money (deposits) from individuals and businesses
for safekeeping in a bank account
Example: savings account
Payment services
Accepting and making payments on behalf of the customers using
their bank accounts
Example: debit cards, electronic banking
Loan underwriting
Evaluating and deciding whether a customer (borrower) is eligible to
receive credit and then extending a loan or credit to the customer
Example: consumer loans, mortgage loans
Main source of revenue and profit to a bank
Interest that the bank receives from the borrowers – interest it pays
to borrowers interest rate margin
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