Liabilities, Liquidity, and Cash Management: Balancing Financial Risks / Edition 1by Dimitris N. Chorafas
Pub. Date: 12/28/2001
During the late nineties stock market boom, borrowing reached astounding rates. Today, both financial institutions and industrial companies are carrying huge debt liabilities created through borrowing, repos, derivatives, and lending to other leveraged sectors of the economy. Liquid assets, many companies' classic safety net, are far outweighed by liabilities,… See more details below
During the late nineties stock market boom, borrowing reached astounding rates. Today, both financial institutions and industrial companies are carrying huge debt liabilities created through borrowing, repos, derivatives, and lending to other leveraged sectors of the economy. Liquid assets, many companies' classic safety net, are far outweighed by liabilities, leaving them overexposed.
This book offers expert advice on proper liability management for financial officers, analysts, traders, investment advisors, loan officers, accountants, and auditors whose daily activities concern the management of liabilities and the control of exposure. Filled with examples and case studies of problems in some of the biggest companies, Liabilities, Liquidity, and Cash Management provides expert advice on proper modern liability management.
Volatile global markets, changing regulatory environments, and the proliferation of new financial products have made the management of liabilities and assets in the balance sheet a critical task. Modern tools like simulation, experimentation, and real-time financial reporting make the job easier, but current assets and liabilities management strategy is changing under the weight of growing debt. This book will bring readers up to date on new theory and practices.
Entities with a large amount of debt must pay a great deal of attention to the quality of liabilities management, including levels of leverage, liquidity thresholds, and cash management. Credit risks, market risks, and reputational risks can be effectively controlled with a proper internal control system. But as a growing number of examples demonstrate, a large number of institutions either have inadequate liabilities management systems or management itself fails to recognize the warning signs.
This book sets out a process of liabilities management for today's leveraged economy. Divided into four parts, the book considers the general principles of liabilities management, liquidity management, cash management, and credit risk. Case studies of the telecom industry and major companies like Bank One, Daewoo, and Xerox help readers understand the importance of good liabilities management and the consequences of inadequate liabilities management.
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Table of Contents
PART ONE: CHALLENGES OF LIABILITIES MANAGEMENT.
1 Market Bubble of Telecoms Stocks.
2 Downfall of Lucent Technologies, Xerox, and Dot-Coms.
3 Liabilities and Derivatives Risk.
4 Reputational and Operational Risk.
PART TWO: MANAGING LIABILITIES.
5 Assets, Liabilities, and the Balance Sheet.
6 Virtual Balance Sheets and Real-Time Control.
7 Liquidity Management and the Risk of Default.
8 Market Liquidity and the Control of Risk.
PART THREE: CASH MANAGEMENT.
9 Cash, Cash Flow, and the Cash Budget.
10 Cash on Hand, Other Assets, and Outstanding Liabilities.
11 Money Markets, Yield Curves, and Money Rates.
12 Mismatched Risk Profiles and Control by the Office of Thrift Supervision.
PART FOUR: CREDIT RISK, MARKET RISK, LEVERAGE, AND THE REGULATORS.
13 Credit Risk, Daewoo, and Technology Companies.
14 Marking to Market and Marking to Model the Loans Book.
15 Changes in Credit Risk and Market Risk Policies.
16 Summary: Management Blunders, Runaway Liabilities, and Technical Miscalculations Leading to Panics.
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