Risk management and value creation in financial institutions

 Content: Cover --
 preface --
 acknowledgments --
 contents --
 Figures --
 Tables --
 Symbols --
 Abbreviations --
 CHAPTER 1 Introduction --
 CHAPTER 2 Foundations for Determining the Link between Risk Management and Value Creation in Banks --
 Value Maximization in Banks --
 Value Maximization as the Firm's Objective --
 Valuation Framework for Banks --
 Problems with the Valuation Framework for Banks --
 Risk Management in Banks --
 Definition of Risk --
 Definition of Risk Management --
 Role and Importance of Risk and Its Management in Banks --
 Link between Risk Management and Value Creation in Banks --
 Goals of Risk Management in Banks --
 Ways to Conduct Risk Management in Banks --
 Empirical Evidence --
 Summary --
 Appendix --
 Part A: Bank Performance --
 Part B: Systematic versus Specific Risk --
 CHAPTER 3 Rationales for Risk Management in Banks --
 Risk Management and Value Creation in the Neoclassical Finance Theory --
 The Neoclassical Finance Theory --
 Corollaries from the Neoclassical Finance Theory with Regard to Risk Management --
 The Risk Management Irrelevance Proposition --
 Summary and Implications --
 Discrepancies Between Neoclassical Theory and Practice --
 Risk Management and Value Creation in the Neoinstitutional Finance Theory --
 Classification of the Relaxation of the Assumptions of the Neoclassical World --
 The Central Role of the Likelihood of Default --
 Agency Costs as Rationale for Risk Management --
 Transaction Costs as a Rationale for Risk Management --
 Taxes and Other Market Imperfections as Rationales for Risk Management --
 Additional Rationales for Risk Management in Banks --
 Summary and Conclusions --
 Appendix --
 CHAPTER 4 Implications of the Previous Theoretical Discussion for This Book --
 CHAPTER 5 Capital Structure in Banks --
 The Role of Capital in Banks --
 Capital as a Means for Achieving the Optimal Capital Structure --
 Capital as Substitute for Risk Management to Ensure Bank Safety --
 Summary and Consequences --
 Derivation of Economic Capital --
 Types of Risk --
 Economic Capital as an Adequate Risk Measure for Banks --
 Ways to Determine Economic Capital for Various Risk Types in Banks (Bottom-Up) --
 Suggestion of an Approach to Determine Economic Capital from the Top Down --
 Evaluation of Using Economic Capital --
 Summary --
 CHAPTER 6 Capital Budgeting in Banks --
 Evolution of Capital-Budgeting Tools in Banks --
 RAROC as a Capital-Budgeting Tool in Banks --
 Definition of RAROC --
 Advantages of RAROC --
 Assumptions of RAROC --
 Deficiencies of RAROC --
 Evaluation of RAROC as a Single-Factor Model for Capital Budgeting in Banks --
 New Approaches to Capital Budgeting in Banks --
 Overview of the New Approaches --
 Evaluation of RAROC in the Light of the New Approaches --
 Implications of the New Approaches to Risk Management and Value Creation in Banks --
 New Approaches as Foundations for a Normative Theory of Risk Management in Banks --
 Areas for Further Research --
 Summary --
 CHAPTER 7 Conclusion --
 References