Capital Allocation

<body topmargin="0" leftmargin="0" stylesrc="../_private/template_title.htm" bgcolor="#FFFFFF" link="#333366" vlink="#000000" alink="#000000"> <table border="0" cellspacing="0" width="100%" cellpadding="10" style="border-collapse: collapse" bordercolor="#111111" id="table11"> <tr> <td width="100%" bgcolor="#FFFFCC"> <p class="header_black">Risk Management: <span class="header_gold">Capital Allocation</span></td> </tr> </table> <div align="left"> <table border="0" cellspacing="4" style="border-collapse: collapse" bordercolor="#111111" width="100%" cellpadding="0" id="table12"> <tr> <td width="740" bgcolor="#FFFFFF"> <div align="center"> <div align="center"> <div align="center"> <table border="0" cellpadding="10" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="468" id="table13"> <tr> <td> <script type="text/javascript"></script> <script type="text/javascript" src="http://pagead2.googlesyndication.com/pagead/show_ads.js"> </script> </td></tr> </table> <div align="center"> <table border="0" cellpadding="6" cellspacing="0" height="206" style="border-collapse: collapse" bordercolor="#111111" width="100%" id="table14"> <tr> <td valign="top" align="right" height="198" width="150"> <p align="left"> <map name="FPMap421"> <area href="../titles/lelyveld_iman_van_(2006).htm" shape="rect" coords="0, 0, 133, 199"> </map> <img border="0" src="../images/book_lelyveld_iman_van_(2006).gif" width="134" height="200" usemap="#FPMap421"></td> <td valign="top" align="left" height="198"> <table border="0" cellspacing="1" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0" width="100%" id="table15"> <tr> <td width="100%"> <p class="book_title">Economic Capital Modeling</td> </tr> <tr> <td width="102%" class="book_details_tags" valign="top" height="16" align="left"> <table border="0" cellpadding="2" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%" id="table16"> <tr> <td width="100%" colspan="4"> <p class="book_details">Iman van Lelyveld</td> </tr> <tr> <td width="50" class="book_details_tags"> <map name="FPMap422"> <area href="../main/ratings.htm" shape="rect" coords="0, 0, 89, 15"> </map> <img border="0" src="../images/star_4.gif" width="90" height="16" usemap="#FPMap422"></td> <td width="25" class="book_details_tags"> <map name="FPMap423"> <area href="../main/ratings.htm" shape="rect" coords="0, 0, 89, 15"> </map> <img border="0" src="../images/tech_1.gif" width="90" height="16" usemap="#FPMap423"></td> <td width="25" class="book_details_tags"> 2006</td> <td width="100%" class="book_details_tags"> <p align="right"><map name="FPMap424"> <area target="_self" href="../titles/lelyveld_iman_van_(2006).htm" shape="rect" coords="0, 0, 90, 25" > </map> <img border="0" src="../images/pointer_review.gif" usemap="#FPMap424" width="90" height="25" ></td> </tr> </table> </td> </tr> <tr> <td class="book_details_tags" valign="top" align="left"> <p class="body"><strong style="font-weight: 400">This book contains papers that developed out of a Working Group on Economic Capital Models that was formed by three Dutch banking or insurance associations. The book seeks to assess the state of economic capital modeling in conglomerates that combine financial and insurance business lines</strong> ... <a href="../titles/lelyveld_iman_van_(2006).htm">Read more</a></td> </tr> </table> </td> </tr> </table> </div> <table border="0" cellpadding="6" cellspacing="0" height="206" style="border-collapse: collapse" bordercolor="#111111" width="100%" id="table17"> <tr> <td valign="top" align="right" height="198" width="150"> <p align="left"> <map name="FPMap54"> <area href="../titles/belmont_david_(2004).htm" shape="rect" coords="0, 0, 135, 199"> </map> <img border="0" src="../images/book_belmont_david_(2004).jpg" usemap="#FPMap54" width="136" height="200"></td> <td valign="top" align="left" height="198"> <table border="0" cellspacing="1" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0" width="100%" id="table18"> <tr> <td width="100%"> <p class="book_title">Value Added Risk Management<br> <font size="3">In Financial Institutions</font></td> </tr> <tr> <td width="102%" class="book_details_tags" valign="top" height="16" align="left"> <table border="0" cellpadding="2" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%" id="table19"> <tr> <td width="100%" colspan="3"> <p class="book_details">David Belmont</td> </tr> <tr> <td width="50" class="book_details_tags"> <map name="FPMap417"> <area href="../main/ratings.htm" shape="rect" coords="0, 0, 89, 15"> </map><img border="0" src="../images/star_5.gif" usemap="#FPMap417" width="90" height="16"></td> <td width="50" class="book_details_tags"> <map name="FPMap411"> <area href="../main/ratings.htm" shape="rect" coords="0, 0, 89, 15"> </map><img border="0" src="../images/tech_2.gif" usemap="#FPMap411" width="90" height="16"></td> <td width="100%" class="book_details_tags"> <p align="right"><map name="FPMap412"> <area target="_self" href="../titles/belmont_david_(2004).htm" shape="rect" coords="0, 0, 90, 25" > </map> <img border="0" src="../images/pointer_review.gif" usemap="#FPMap412" width="90" height="25" ></td> </tr> </table> </td> </tr> <tr> <td class="book_details_tags" valign="top" align="left"> <p class="body"><strong style="font-weight: 400">Economic capital allocation and risk-adjusted performance metrics were pioneered by Bankers Trust during the early 1980s. Over time, similar techniques have been adopted by some, but not all, major financial institutions. The techniques largely parallel the Basle Committee's regulatory capital guidelines for banks, but are modified to support internal decision making</strong> ... <a href="../titles/belmont_david_(2004).htm">Read more</a></td> </tr> </table> </td> </tr> </table> <div align="center"> <table border="0" cellpadding="6" cellspacing="0" height="206" style="border-collapse: collapse" bordercolor="#111111" width="100%" id="table20"> <tr> <td valign="top" align="right" height="198" width="150"> <p align="left"> <map name="FPMap4"> <area href="../titles/dev_and_rao_(2006).htm" shape="rect" coords="0, 0, 132, 199"> </map> <img border="0" src="../images/book_dev_and_rao_(2006).gif" width="133" height="200" usemap="#FPMap4"></td> <td valign="top" align="left" height="198"> <table border="0" cellspacing="1" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0" width="100%" id="table21"> <tr> <td width="100%"> <p class="book_title">Performance Measurement in Financial Institutions in an ERM Framework</td> </tr> <tr> <td width="102%" class="book_details_tags" valign="top" height="16" align="left"> <table border="0" cellpadding="2" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%" id="table22"> <tr> <td width="100%" colspan="4"> <p class="book_details">Ashish Dev and Vandana Rao</td> </tr> <tr> <td width="50" class="book_details_tags"> <map name="FPMap418"> <area href="../main/ratings.htm" shape="rect" coords="0, 0, 89, 15"> </map> <img border="0" src="../images/star_4.gif" width="90" height="16" usemap="#FPMap418"></td> <td width="25" class="book_details_tags"> <map name="FPMap419"> <area href="../main/ratings.htm" shape="rect" coords="0, 0, 89, 15"> </map> <img border="0" src="../images/tech_2.gif" width="90" height="16" usemap="#FPMap419"></td> <td width="25" class="book_details_tags"> 2006</td> <td width="100%" class="book_details_tags"> <p align="right"><map name="FPMap420"> <area target="_self" href="../titles/dev_and_rao_(2006).htm" shape="rect" coords="0, 0, 90, 25" > </map> <img border="0" src="../images/pointer_review.gif" usemap="#FPMap420" width="90" height="25" ></td> </tr> </table> </td> </tr> <tr> <td class="book_details_tags" valign="top" align="left"> <p class="body"><strong style="font-weight: 400">Risk-adjusted return on capital (RAROC), funds transfer pricing, activity-based cost (ABC) accounting, economic profit, active credit portfolio management (ACPM). Call them performance metrics; call them management tools; or call them buzzwords. They are the topics of this ambitious book. It sets our to survey techniques of performance measurement </strong>... <a href="../titles/dev_and_rao_(2006).htm">Read more</a></td> </tr> </table> </td> </tr> </table> </div> <table border="0" cellpadding="6" cellspacing="0" height="206" style="border-collapse: collapse" bordercolor="#111111" width="100%" id="table23"> <tr> <td valign="top" align="right" height="198" width="150"> <p align="left"> <map name="FPMap322"> <area href="../titles/matten_c_(2000).htm" shape="rect" coords="0, 0, 132, 199"> </map> <img border="0" src="../images/book_matten2.jpg" usemap="#FPMap322" width="133" height="200"></td> <td valign="top" align="left" height="198"> <table border="0" cellspacing="1" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0" width="100%" id="table24"> <tr> <td width="100%"> <p class="book_title">Managing Bank Capital: <br> <span class="book_title_sub">Capital Allocation and Performance Measurement</span></td> </tr> <tr> <td width="102%" class="book_details_tags" valign="top" height="16" align="left"> <table border="0" cellpadding="2" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%" id="table25"> <tr> <td width="100%" colspan="3"> <p class="book_details">Chris Matten</td> </tr> <tr> <td width="50" class="book_details_tags"> <map name="FPMap261"> <area href="../main/ratings.htm" shape="rect" coords="0, 0, 89, 15"> </map> <img border="0" src="../images/star_5.gif" usemap="#FPMap261" width="90" height="16"></td> <td width="50" class="book_details_tags"> <map name="FPMap319"> <area href="../main/ratings.htm" shape="rect" coords="0, 0, 89, 15"> </map><img border="0" src="../images/tech_2.gif" usemap="#FPMap319" width="90" height="16"></td> <td width="100%" class="book_details_tags"> <p align="right"><map name="FPMap332"> <area target="_self" href="../titles/matten_c_(2000).htm" shape="rect" coords="0, 0, 90, 25" > </map> <img border="0" src="../images/pointer_review.gif" usemap="#FPMap332" width="90" height="25" ></td> </tr> </table> </td> </tr> <tr> <td class="book_details_tags" valign="top" align="left"> <p class="body">When people talk of bank capital, this is the book that comes to mind. The first edition was a short text that focused primarily on economic capital and concepts such as RAROC. That was so successful that the author vastly expanded it as this second edition. Now the book is an in-depth look at bank capital ... <a href="../titles/matten_c_(2000).htm">Read more</a></td> </tr> </table> </td> </tr> </table> </div> <table border="0" cellpadding="6" cellspacing="0" height="206" style="border-collapse: collapse" bordercolor="#111111" width="100%" id="table26"> <tr> <td valign="top" align="right" height="198" width="150"> <p align="left"> <map name="FPMap53"> <area href="../titles/van_deventer_and_imai_(2004).htm" shape="rect" coords="0, 0, 128, 199"> </map> <img border="0" src="../images/book_van_deventer_and_imai_(2004).gif" usemap="#FPMap53" width="129" height="200"></td> <td valign="top" align="left" height="198"> <table border="0" cellspacing="1" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0" width="100%" id="table27"> <tr> <td width="100%"> <p class="book_title">Credit Risk Models<br> <font size="3">and the Basel Accords</font></td> </tr> <tr> <td width="102%" class="book_details_tags" valign="top" height="16" align="left"> <table border="0" cellpadding="2" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%" id="table28"> <tr> <td width="100%" colspan="3"> <p class="book_details">D. van Deventer and K. Imai</td> </tr> <tr> <td width="50" class="book_details_tags"> <map name="FPMap51"> <area href="../main/ratings.htm" shape="rect" coords="0, 0, 89, 15"> </map> <img border="0" src="../images/star_4.gif" usemap="#FPMap51" width="90" height="16"></td> <td width="50" class="book_details_tags"> <map name="FPMap52"> <area href="../main/ratings.htm" shape="rect" coords="0, 0, 89, 15"> </map> <img border="0" src="../images/tech_3.gif" usemap="#FPMap52" width="90" height="16"></td> <td width="100%" class="book_details_tags"> <p align="right"><map name="FPMap409"> <area target="_self" href="../titles/van_deventer_and_imai_(2004).htm" shape="rect" coords="0, 0, 90, 25" > </map> <img border="0" src="../images/pointer_review.gif" usemap="#FPMap409" width="90" height="25" ></td> </tr> </table> </td> </tr> <tr> <td class="book_details_tags" valign="top" align="left"> <p class="body"><strong style="font-weight: 400">Credit risk modeling is a hot topic these days, with changes taking place in the Basel Accord and innovative reduced form and Merton-style models challenging traditional credit analysis</strong> ... <a href="../titles/van_deventer_and_imai_(2004).htm">Read more</a></td> </tr> </table> </td> </tr> </table> </div> </div> <div align="center"> <div align="center"> <table border="0" cellpadding="6" cellspacing="0" height="206" style="border-collapse: collapse" bordercolor="#111111" width="100%" id="table29"> <tr> <td valign="top" align="right" height="198" width="150"> <p align="left"> <map name="FPMap413"> <area href="../titles/dev_ashish_(2004).htm" shape="rect" coords="0, 0, 134, 199"> </map> <img border="0" src="../images/book_dev_ashish_(2004).gif" usemap="#FPMap413" width="135" height="200"></td> <td valign="top" align="left" height="198"> <table border="0" cellspacing="1" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0" width="100%" id="table30"> <tr> <td width="100%"> <p class="book_title">Economic Capital<br> <font size="3">A Practitioner Guide</font></td> </tr> <tr> <td width="102%" class="book_details_tags" valign="top" height="16" align="left"> <table border="0" cellpadding="2" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%" id="table31"> <tr> <td width="100%" colspan="3"> <p class="book_details">Ashish Dev</td> </tr> <tr> <td width="50" class="book_details_tags"> <map name="FPMap414"> <area href="../main/ratings.htm" shape="rect" coords="0, 0, 89, 15"> </map> <img border="0" src="../images/star_4.gif" usemap="#FPMap414" width="90" height="16"></td> <td width="50" class="book_details_tags"> <map name="FPMap415"> <area href="../main/ratings.htm" shape="rect" coords="0, 0, 89, 15"> </map> <img border="0" src="../images/tech_3.gif" usemap="#FPMap415" width="90" height="16"></td> <td width="100%" class="book_details_tags"> <p align="right"><map name="FPMap416"> <area target="_self" href="../titles/dev_ashish_(2004).htm" shape="rect" coords="0, 0, 90, 25" > </map> <img border="0" src="../images/pointer_review.gif" usemap="#FPMap416" width="90" height="25" ></td> </tr> </table> </td> </tr> <tr> <td class="book_details_tags" valign="top" align="left"> <p class="body"><strong style="font-weight: 400">Risk adjusted return on capital (RAROC) and related methodologies have been around for 20 years. Development of the new Basle II guidelines for regulatory bank capital have spurred new interest in such techniques. The new catchword for all this is economic capital. The thinking is that</strong> ... <a href="../titles/dev_ashish_(2004).htm">Read more</a></td> </tr> </table> </td> </tr> </table> </div> <table border="0" cellpadding="6" cellspacing="0" height="206" style="border-collapse: collapse" bordercolor="#111111" width="100%" id="table32"> <tr> <td valign="top" align="right" height="198" width="150"> <p align="left"> <map name="FPMap3"> <area href="../titles/schroeck_g_(2002).htm" shape="rect" coords="0, 0, 133, 199"> </map> <img border="0" src="../images/book_schroeck_g_(2002).jpg" usemap="#FPMap3" width="134" height="200"></td> <td valign="top" align="left" height="198"> <table border="0" cellspacing="1" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0" width="100%" id="table33"> <tr> <td width="100%"> <p class="book_title">Risk Management and Value Creation in Financial Institutions</td> </tr> <tr> <td width="102%" class="book_details_tags" valign="top" height="16" align="left"> <table border="0" cellpadding="2" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%" id="table34"> <tr> <td width="100%" colspan="3"> <p class="book_details">Gerhard Schroeck</td> </tr> <tr> <td width="50" class="book_details_tags"> <map name="FPMap425"> <area href="../main/ratings.htm" shape="rect" coords="0, 0, 89, 15"> </map> <img border="0" src="../images/star_4.gif" usemap="#FPMap425" width="90" height="16"></td> <td width="50" class="book_details_tags"> <map name="FPMap2"> <area href="../main/ratings.htm" shape="rect" coords="0, 0, 89, 15"> </map> <img border="0" src="../images/tech_3.gif" usemap="#FPMap2" width="90" height="16"></td> <td width="100%" class="book_details_tags"> <p align="right"><map name="FPMap408"> <area target="_self" href="../titles/schroeck_g_(2002).htm" shape="rect" coords="0, 0, 90, 25" > </map> <img border="0" src="../images/pointer_review.gif" usemap="#FPMap408" width="90" height="25" ></td> </tr> </table> </td> </tr> <tr> <td class="book_details_tags" valign="top" align="left"> <p class="body"><strong style="font-weight: 400">Schroeck has written a theoretician's text on risk management and capital allocation within banks</strong> ... <a href="../titles/schroeck_g_(2002).htm">Read more</a></td> </tr> </table> </td> </tr> </table> <table border="0" cellpadding="10" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="468" id="table35"> <tr> <td> <script type="text/javascript"></script> <script type="text/javascript" src="http://pagead2.googlesyndication.com/pagead/show_ads.js"> </script> </td></tr> </table> </div> </td> <td bgcolor="#FFFFFF">  </td> </tr> </table> </div> <div align="center"> <center> <table border="0" cellpadding="10" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%" id="table36"> <tr> <td width="50%" bgcolor="#FFFFCC" align="left" valign="top"> <script type="text/javascript"></script> <script type="text/javascript" src="http://pagead2.googlesyndication.com/pagead/show_ads.js"> </script> </td><td width="50%" bgcolor="#CCCCFF" align="left" valign="top"> <p class="body" style="margin:4 7; "><b> <font color="#333366" size="3">For related books, also see sections:</font></b></p> <p class="bullet" style="margin:4 7; "> <img border="0" src="../images/bullet.gif" width="20" height="10"><a target="_top" href="../link_topic/risk_management_general.htm">Risk Management - General</a></p> <p class="bullet" style="margin:4 7; "> <img border="0" src="../images/bullet.gif" width="20" height="10"><a target="_top" href="../link_topic/risk_management_market_risk.htm">Risk Management - Market Risk</a></p> <p class="bullet" style="margin:4 7; "> <img border="0" src="../images/bullet.gif" width="20" height="10"><a target="_top" href="../link_topic/risk_management_credit_institutional.htm">Risk Management - Credit Risk</a></p> <p class="bullet_line_space" style="margin:4 7; "> <img border="0" src="../images/bullet.gif" width="20" height="10"><a target="_top" href="../link_topic/risk_management_operational_risk.htm">Risk Management - Operational Risk</a></p> <p class="bullet" style="margin:4 7; "> <img border="0" src="../images/bullet.gif" width="20" height="10"><a target="_top" href="../link_topic/risk_management_liquidity_risk.htm">Risk Management - Liquidity Risk</a></p> <p class="bullet" style="margin:4 7; "> <img border="0" src="../images/bullet.gif" width="20" height="10"><a target="_top" href="../link_topic/risk_management_alm.htm">Risk Management - Asset-Liability Management</a></p> <p class="bullet" style="margin:4 7; "> <img border="0" src="../images/bullet.gif" width="20" height="10"><a target="_top" href="../link_topic/risk_management_corporate.htm">Risk Management - Corporate</a></p> <p class="bullet" style="margin:4 7; "> <img border="0" src="../images/bullet.gif" width="20" height="10"><a target="_top" href="../link_topic/portfolio_management_asset_allocation.htm">Portfolio Management - Asset Allocation</a></p> <p class="bullet_line_space" style="margin:4 7; "> <img border="0" src="../images/bullet.gif" width="20" height="10"><a target="_top" href="../link_topic/other_functions_regulation.htm">Other Functions - Regulation</a></p> <p class="bullet_line_space" style="margin:4 7; 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