Modern Banking And Strategic Portfolio Management

In this research, an analysis of modern banking in a competitive environment is provided.  Modern banking operations would involve dynamic strategic planning, in which a clear mission is declared, various strategies are formulated, and certain objectives and goals are placed in order.  The banking industry in various countries has gone through some evolution.  The growing competitive conditions, both inside and outside the industry, have influenced the banks’ investment in diverse assets and adoption of various forms of liabilities, which will be discussed here.  Risk analysis, risk management, and operations under uncertainties would put a bank’s survival and/or failure under a critical observation.  This research provides a practical manual on bank investment under uncertain conditions, in which various kinds of risk are involved.  While a competitive treatment of customers has always been of a critical significance to financial stability of banks, appropriate strategic decisions on investment choices and techniques have distinguished the thriving from the struggling banks.  Among those alternative investment choices, one may clearly find the investment practices under varying interest-rate conditions of prime significance.  The influence of cyber-technology on banks’ services, policy making, forms of money & credit, including, e-money, electronic payments, digital cash, smart cards, online banking, etc., has attracted special attention by all the stakeholders.  The authors will address the following three questions: 1. What portfolio structure in a variable interest-rate environment is proven to be most profitable?  2. What are the most appropriate products that modern banks must provide to their customers? 3.  How is the task of risk management implemented by some successful banks?

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Mechanisms of Protection from Interest Rate Risk with Reference to the Life Insurance Market in Montenegro

Journal of Central Banking Theory and Practice ◽

10.2478/jcbtp-2018-0002 ◽

2018 ◽

Vol 7 (1) ◽

pp. 17-42

Author(s):

Milijana Novović Burić ◽

Vladimir Kašćelan ◽

Milivoje Radović ◽

Ana Lalević Filipović

Keyword(s):

Risk Management ◽

Interest Rate ◽

Life Insurance ◽

Financial Management ◽

Financial Stability ◽

Interest Rate Risk ◽

Economic Security ◽

Insurance Market ◽

Insurance Companies ◽

Rate Risk

Abstract Insurance companies are facing major challenges that point to the need for control process and risk management. Risk management in insurance has a direct impact on solvency, economic security, and overall financial stability of insurance companies. It is very important for insurance companies to adequately calculate risks to which they are exposed. Asset liability management (ALM), as an integrated approach to financial management, requires simultaneous decision-making about categories and values of assets and liabilities in order to establish the optimum volume and the ratio of assets and liabilities, with the understanding of complexity of the financial market in which financial institutions operate. ALM focuses on a significant number of risks, whereby the emphasis in this paper will be on interest rate risk which indicates potential losses that may reflect in a lower interest margin, a lower value of assets or both, in terms of changes in interest rates. In the above context, the aim of this paper is to show how to protect from interest rate changes and how these changes influence the insurance market in Montenegro, both from the theoretical and the practical point of view. The authors consider this to be an interesting and very important topic, especially because the life insurance market in Montenegro is underdeveloped and subject to fluctuations. Also, taking into account the fact that Montenegro is a country that has been making serious efforts to join the EU, it is expected that insurance companies in Montenegro will strengthen their financial position in the market even using the ALM traditional techniques, which is shown in this paper.

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Bank capital, financial stability and Basel regulation in a low interest-rate environment

International Review of Economics & Finance ◽

10.1016/j.iref.2020.02.008 ◽

2020 ◽

Vol 67 ◽

pp. 378-392 ◽

Cited By ~ 2

Author(s):

Margarita Rubio ◽

Fang Yao

Keyword(s):

Interest Rate ◽

Financial Stability ◽

Bank Capital ◽

Rate Environment

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METHODOLOGICAL FOUNDATIONS FOR THE DEVELOPMENT OF THE FINANCIAL STABILITY RISK MANAGEMENT SYSTEM IN THE INVESTMENT ACTIVITIES OF BANKS

Vestnik of Samara State University of Economics ◽

10.46554/1993-0453-2021-5-199-75-80 ◽

2021 ◽

Vol 5 (199) ◽

pp. 75-80

Author(s):

T.S. Fedorenko ◽

Keyword(s):

Risk Management ◽

Portfolio Management ◽

Management System ◽

Financial Stability ◽

Iterative Process ◽

Management Practices ◽

Negative Impact ◽

Business Environment ◽

Changes In Risk ◽

Financial Result

The risk of loss of financial stability in the investment activities of banks is the probability of a negative impact of the negative financial result of the bank's investment activities on the capital structure and bringing it to an imbalance of funds. This type of risk is complex and includes several types of banking risks that have a direct impact on the financial stability of the bank. A system for managing such a risk implies a combination of three systems: the control system, the managed system and the result of the management. Each of the elements of the system is subject to the principles of managing the risk of loss of financial stability and thus contributes to achieving the result - minimizing the studied risk. Effective risk management is a crucial task of the bank to ensure profitability, as well as to maximize the value of shareholders. The business environment and the development of technologies had a significant impact on changes in risk management practices. The management of the considered risk is an iterative process. All links are constantly changing, and each change affects the other links. Managing this risk is a part of the bank's portfolio management process. For each bank, the management system is built based on the needs and specifics. Control elements can manifest themselves in a large number, so they need to be evaluated, grouped and determine the degree of influence on the financial stability of the bank's investment activities.

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