Computing Skills in Forecasting for Liquidity Risk Management in the Indian Banking Industry

2014 ◽  
pp. 172-185 ◽  
Author(s):  
Rituparna Das
Keyword(s):  
Risk Management ◽  
Central Bank ◽  
Interest Rates ◽  
Time Series Data ◽  
Banking Industry ◽  
Liquidity Risk ◽  
Monetary Base ◽  
Computing Skills ◽  
The Government ◽  
The Interest Rate

Liquidity Risk Management (LRM) in the banking industry happens at two levels: (1) the Central Bank (i.e. the regulator) and (2) the commercial banks. The term “liquidity” for the Central Bank means the monetary base consisting of the currency and the reserves in the banking system. These are the supply side of the interest rate market. The Central Bank being the only supplier of the same can target the interest rates by varying supply of monetary base and vice versa. There are several ways including auctioning and redeeming the government securities for squeezing and pumping liquidity into the system. However, before such recourse, the Central Bank needs an assessment of the liquidity requirement of the system and applies the forecasting techniques, which are mostly econometric by nature involving the time series data. This chapter explores this process.

Computing Skills in Forecasting for Liquidity Risk Management in the Indian Banking Industry

2014 ◽  
pp. 948-961
Author(s):  
Rituparna Das
Keyword(s):  
Risk Management ◽  
Central Bank ◽  
Interest Rates ◽  
Time Series Data ◽  
Banking Industry ◽  
Liquidity Risk ◽  
Monetary Base ◽  
Computing Skills ◽  
The Government ◽  
The Interest Rate

Liquidity Risk Management (LRM) in the banking industry happens at two levels: (1) the Central Bank (i.e. the regulator) and (2) the commercial banks. The term “liquidity” for the Central Bank means the monetary base consisting of the currency and the reserves in the banking system. These are the supply side of the interest rate market. The Central Bank being the only supplier of the same can target the interest rates by varying supply of monetary base and vice versa. There are several ways including auctioning and redeeming the government securities for squeezing and pumping liquidity into the system. However, before such recourse, the Central Bank needs an assessment of the liquidity requirement of the system and applies the forecasting techniques, which are mostly econometric by nature involving the time series data. This chapter explores this process.

scholarly journals FASILITAS DISKONTO (DISCOUNT WINDOWS) SEBAGAI INSTRUMEN MONETER DITINJAU DALAM PERSPEKTIF EKONOMI ISLAM

2019 ◽  
Vol 4 (1) ◽  
pp. 71
Author(s):  
RINA EL MAZA ◽  
EGI PUTRA SETIAWAN
Keyword(s):  
Interest Rate ◽  
Central Bank ◽  
Interest Rates ◽  
Commercial Banks ◽  
Profit Sharing ◽  
The Public ◽  
The Government ◽  
Islamic Economic ◽  
The Interest Rate

The government has an important role in the welfare of the people's economy. One of them is through the role of the central bank by carrying out monetary policy. This policy was adopted by the central bank or Bank Indonesia (BI) through several instruments, including through regulating discount rates for commercial banks. In this case, BI sets the inflation target as a reference for determining interest rates. When the inflation rate exceeds the targeted, BI will raise interest rates which in turn will reduce the credit issued by commercial banks to the public, because commercial banks must pay higher interest rates to the central bank. And the results of the analysis that the interest rate charged in the credit (Lending Facility) discount facility is classified as an act of usury. Meanwhile, the profits obtained from the deposit of funds in the Facility Deposit transaction are not permitted in the Islamic economy, because in the Islamic economy there is no interest rate but profit sharing, given the fixed and concrete interest rates. In addition, the discount facility is also incompatible with some Islamic economic principles, including; the principle of Illahiyah, Justice, and the government.

scholarly journals Risk Management for Bonds with Embedded Options

Mathematics ◽  
2020 ◽  
Vol 8 (5) ◽  
pp. 790
Author(s):  
Antonio Díaz ◽  
Marta Tolentino
Keyword(s):  
Risk Management ◽  
Interest Rate ◽  
Interest Rates ◽  
Interest Rate Risk ◽  
Interest Rate Models ◽  
Management Measures ◽  
Interest Rate Risk Management ◽  
Embedded Options ◽  
The Interest Rate ◽  
Interest Rate Change

This paper examines the behavior of the interest rate risk management measures for bonds with embedded options and studies factors it depends on. The contingent option exercise implies that both the pricing and the risk management of bonds requires modelling future interest rates. We use the Ho and Lee (HL) and Black, Derman, and Toy (BDT) consistent interest rate models. In addition, specific interest rate measures that consider the contingent cash-flow structure of these coupon-bearing bonds must be computed. In our empirical analysis, we obtained evidence that effective duration and effective convexity depend primarily on the level of the forward interest rate and volatility. In addition, the higher the interest rate change and the lower the volatility, the greater the differences in pricing of these bonds when using the HL or BDT models.

Australian central bank holds rate as growth slips

2021 ◽  
Keyword(s):  
Economic Growth ◽  
Central Bank ◽  
Interest Rates ◽  
Labour Markets ◽  
Content Type ◽  
Commercial Lenders ◽  
The Government ◽  
Roll Out ◽  
Growth Forecasts

Significance The RBA has cut its growth forecasts amid rising job losses, weakening demand and increasing signs that the latest COVID-19 lockdowns will continue to slow the economy until the pace of the vaccine roll-out programme can be increased. Impacts Although the RBA is independent, the government will hope it keeps rates low ahead of the elections due next year. Commercial lenders could raise interest rates independently of the RBA if inflation remains high. Wage pressures will re-emerge as labour markets tighten but may be mitigated by the extent of underemployment. Economic growth will be uneven across the country in coming months as pandemic-related restrictions vary by location.

Inside the Bank Box

2019 ◽  
pp. 368-405
Author(s):  
Leonardo Gambacorta ◽  
Paul Mizen
Keyword(s):  
Interest Rate ◽  
Central Bank ◽  
Interest Rates ◽  
Adjustment Costs ◽  
Bank Lending ◽  
Bank Capital ◽  
Bank Lending Channel ◽  
Lending Channel ◽  
Pass Through ◽  
The Interest Rate

Central bank policy operates first through financial markets and then through banks as they adjust their interest rates. This chapter discusses the transmission of policy in this first step of the monetary transmission mechanism, known as interest-rate pass-through. Historically, the focus of attention has been the interest-rate channel. We show the origins of this channel via a microfounded model of interest-rate setting by deposit-taking institutions that are Cournot oligopolists facing adjustment costs. We then examine other channels such as the bank lending channel and the bank capital channel and the role of central bank communications, signaling, and forward guidance over future interest rates. Each is shown to influence the setting of current short-term interest rates. The chapter closes with some issues for the future of pass-through in the transmission process.

Pandemic will take heavy economic toll in Colombia

2020 ◽  
Keyword(s):  
Central Bank ◽  
Interest Rates ◽  
Economic Impacts ◽  
Fiscal Deficit ◽  
Slow Recovery ◽  
Content Type ◽  
Fiscal Incentives ◽  
Second Year ◽  
The Government

Significance This has triggered a series of economic setbacks. The economy showed modest growth in the first quarter of 2020 before plummeting 15.7% in the second, year-on-year. Various industries and sectors have all but ground to a halt. Unemployment reached 20.3% in the second quarter. Impacts Fiscal incentives implemented by the government to mitigate the pandemic’s economic impacts will widen Colombia’s fiscal deficit. Interest rates will probably drop further as the Central Bank tries to add liquidity into the economy. Fiscal pressures imply a slow recovery for the economy in coming years, rolling back two decades of social improvements.

New Ukrainian cabinet raises fears of slowing reform

2020 ◽  
Keyword(s):  
Central Bank ◽  
Interest Rates ◽  
Land Reform ◽  
Prime Minister ◽  
Content Type ◽  
The People ◽  
Obvious Reason ◽  
The Government

Subject Ukraine's reshuffle. Significance A new cabinet was unveiled on March 4 after the resignation of Prime Minister Olexiy Honcharuk. The reshuffle was carried out in a hurry with no obvious reason for such haste. Honcharuk's team is being blamed for some problems that long pre-date its five-month tenure. President Volodymyr Zelensky may be seeking to shore up his formerly sky-high popularity ratings, which fell below 50% in early February. Impacts The dismissal of Prosecutor General Ruslan Ryaboshabka will add to concerns about the commitment to fight corruption. The government reshuffle has more implications for the economy than for the conflict in eastern Ukraine. Zelensky has tried to get a land reform passed; he may be less keen if it is liable to reduce his popularity. The reshuffle may be a sacrifice made to maintain disparate loyalties in Zelensky's Servant of the People party. A further fall in inflation would let the central bank keep cutting interest rates.

scholarly journals Central banks and civil war termination

2021 ◽  
pp. 002234332110381
Author(s):  
Ana Carolina Garriga
Keyword(s):  
Civil War ◽  
Central Bank ◽  
Interest Rates ◽  
Civil Wars ◽  
Central Banks ◽  
Central Bank Independence ◽  
War Termination ◽  
International Credit ◽  
The Government ◽  
Good Signal

The ability to finance conflict likely affects the odds of sustaining a war and succeeding in it. Recent literature explores rebel group funding, but far less is known about how states finance their own war efforts. This article posits that the design of central banks should affect civil war termination. In particular, it argues that central bank independence affects civil war termination through two channels. First, financial markets consider central bank independence as a good signal in terms of macroeconomic stability and debt repayment. In this way, independent central banks enhance the ability of the government to access credit to finance and end a civil war. Second, central bank independence is associated with lower inflation. Inflation control reduces one source of additional grievances that the civil war may impose on citizens. On a sample of civil wars between 1975 and 2009, central bank independence is associated with a substantial increase in the likelihood of war termination. When the form of termination is disaggregated, (higher) central bank independence is associated with a higher probability of government victory, relative to continued conflict and to other outcomes. Additional tests provide support for the argued mechanisms: during civil wars, countries with more independent central banks access international credit markets in better conditions – i.e. they pay lower interest rates, and receive longer grace and maturity periods on new debt. Furthermore, in countries experiencing civil wars, central bank independence is associated with lower inflation.

scholarly journals FRIENDLY LOAN: A LEGAL STUDY IN MALAYSIA

2021 ◽  
Vol 6 (26) ◽  
pp. 39-47
Author(s):  
Hua Siong Wong
Keyword(s):  
Interest Rate ◽  
Central Bank ◽  
Interest Rates ◽  
Financial Institutions ◽  
Financial Services ◽  
Legal Issues ◽  
Legal Study ◽  
Library Research ◽  
Laws And Policies ◽  
The Interest Rate

Financial institutions licensed which were established under the Financial Services Act 2013 and the Moneylenders Act 1951 in Malaysia will provide financial loans at the interest rate charged permitted by-laws and guidelines from the Central Bank of Malaysia to borrowers. However, not all borrowers can afford to pay high and onerous interest rates. Therefore, the law in Malaysia allows for friendly loans, i.e. the lender will provide financial loans assistance to the borrower from of interest or with minimal interest rate. This study will focus on the extent to which the legal issues of the practice of friendly loans in Malaysia and whether the provisions of current laws and policies can protect the interests of both lenders and recipients of friendly loans. This study is qualitative in nature and involves library research. The results of this study will look at aspects of legal issues in order to protect the interests of both lenders and recipients of friendly loans. In fact, Malaysia could also consider creating a special law on friendly loans and regulated by the authorities.

scholarly journals The Role of Central Bank of Jordan in Economic Development

2019 ◽  
pp. 221-226
Author(s):  
Dr. Khaled Abdalla Moh’d AL-Tamimi ◽  
Dr. Mohammad Sulieman Jaradat ◽  
Dr. Ashraf Mahammad Al-Rjoub
Keyword(s):  
Economic Development ◽  
Central Bank ◽  
Banking Industry ◽  
Policy Instruments ◽  
Integrated System ◽  
Economic Life ◽  
Economic Resource ◽  
Investment Activity ◽  
Economic Process ◽  
The Government

The main purpose of this research is to study and highlight that central bank of Jordan (CBJ) plays an important role in economic development. The objective of the financial organization shall be to keep up financial and money stability, to confirm the interchangeability of the Dinar, and to contribute in achieving the banking and money stability within the Kingdom likewise as promoting sustained economic process in accordance with the overall economic policies of the government. To achieve the above- mentioned objectives, CBJ assumes many tasks portrayed in drawing and implementing the financial policy within the Kingdom through an integrated system of monetary policy instruments, setting a evaluation policy of the Dinar compatible with the Jordanian economy, maintaining and managing the Kingdom’s reserves of gold and foreign currencies, regulation credit within the Jordanian economy so as to realize financial and money stability likewise as comprehensive economic process, and issue and regulation bank notes and coins. Subsequently, the central bank plays necessary role within the economic resource allocation of the country. The banking industry may be a major issue that affects the organization of social and economic life cycle within the economies of the planet. it is thought about as associate degree indicator of economic and social growing.. Also, developed financial set up ought to be characterized by the existence of a contemporary and complicated banking industry that contributes to achieving economic balance. It conjointly encourages domestic and foreign investment through the banking system’s ability to states. The aim of the banking industry is to draw in savings domestically and abroad, and direct those savings into productive investment. As a result, this contributes to the accomplishment of economic and social development method, and conjointly facilitates investment activity.

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