Book: Bank Funds Management: Text and Readings
John A. Haslem, Bank Funds Management: Text and Readings, Reston, VA: Reston Publishing Company (Prentice-Hall), 1984
Posted: 11 May 2015 Last revised: 11 Aug 2015
Date Written: August 25, 2015
Abstract
This book focuses on "bank funds management," an area of increasing importance to the management of commercial banks. Bank funds management is the key to short-to-intermediate term decision making in today's dynamic and volatile banking environment. Broadly defined, banks funds management includes all policies designed to obtain and allocate funds. The emphasis is on funds over which management has discretionary control--"discretionary funds management."
The book includes three sections. Part 1 includes an introduction to banking. Part II includes functionally related funds management. And, Part III includes integrative funds management.
The book has seven chapters: (1) the dynamics of banking, (2) evolution of bank funds management, (3) liquidity management: cash assets, (4) liquidity management: earning assets and liability management, (5) investment management, (6) management science approaches to funds management, and (7) asset/liability management.
Discretionary funds management primarily accepts as given (1) those assets and funds sources based on customer relationships, such as loan portfolios and core deposits, and (2) those sources and uses of funds that are subject to strategic management and significant regulation, such as bank capital. This is especially true in the short decision horizon. Short-term funds management is concerned with maintenance of the capital position, rather than making any significant changes. Discretionary funds management does not typically include short-term management of core deposits derived from personal relationships, short-term funding of commercial and retail loan programs, and strategic management of bank capital.
Non-earning cash assets are considered to be non-discretionary in nature because a major portion are legally required reserves that support deposits. Bank cash positions require continual monitoring if they are to be maintained at minimum levels consistent with daily cash operating needs, legal reserve requirements, and levels of services received from correspondent banks. Assets and liabilities over which bank management has discretionary control are used to make any needed adjustments in cash positions.
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