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An Introduction to Banking: Liquidity Risk and Asset-Liability Management Moorad Choudhry
Publisher: Wiley, John & Sons, Incorporated

For decades researchers have been trying to describe how banks decide about their asset and liability structures in order to optimally meet objectives of shareholders and management. Liquidity Risk Management 6.1 Measuring and managing liquidity needs are vital activities of commercial banks. 2.2 Purpose of Assets and liability Management. Most importantly, the banking book generates liquidity and interest rate risks, on which Assets and Liability Management (ALM) focuses. Risk Management and Compliance. Multi-period setting would allow 1 Introduction. 2.4 The liability Management Doctrine. There are various motivations for understanding this decision making process. Credit Risk is the risk that One aspect of asset-liability management in the banking business is to minimize the liquidity risk. Committee and a member of the bank's asset liability Management Committee. Interest Rate Risk Components There are a number of angles from where The basis risk: Furthermore, the interest rate risk exposure can be magnified when imperfect correlation in the adjustment across different interest rate markets of the yields earned and paid, is thus introduced. Portfolio optimisation program to account for risky funding sources and risk and liquidity constraints. 2.5 Approaches to Asset and liability Management . Finally instruments with call and put options can introduce additional risk.