Explain the importance of liquidity management

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Reference no: EM13977117

1. The profitability of a bank depends on several different factors.

a. Why is “Gap Analysis” so important to a bank? 

b. What should a bank do if inflation increases?   Explain with examples.

c. What should a bank do if inflation decreases? Explain with examples.

2. Banks manage their assets in a variety of ways.

a. Explain the importance of “liquidity management”? 

b. What is the concern of the bank in regard to the liquidity of its assets?  

c. What can banks do to management liquidity risk?

3. Bank Management is becoming increasingly complicated.

a. What are the Four Major concerns of bank managers in ensuring the profitability of their operations?

b. Explain three with examples.

c. Which one do you believe is most important? Explain with examples.

4. The management of bank risk is a crucial function of management.

a. What are the most important risk management principles that involve approving loans?

b. Why do Adverse Selection and Moral Hazards make the underwriting process more complicated.

c. Is the loan approval process different in Western/International banks in comparison to Islamic banks? Explain with examples.

Reference no: EM13977117

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