Asset and Liability Management - The Institutional Approach to ALM by Commercial Banks in Poland: A Special Focus on Risk Management

Determining Factors of Banking Performance in Indonesia

International Journal of Innovative Technology and Exploring Engineering - Special Issue ◽

10.35940/ijitee.a5077.039520 ◽

2020 ◽

Vol 9 (5) ◽

pp. 1507-1512

Keyword(s):

Commercial Banks ◽

Foreign Currency ◽

Specific Factor ◽

Economic Activities ◽

Liability Management ◽

Panel Data Regression ◽

Determining Factors ◽

Asset And Liability Management ◽

Demand Deposits ◽

Open Position

Motivated by the large number of banking studies in Indonesia that have not included NOP (Net Open Position) in profitability modeling, our research aims to realize this. As for the reason for the importance of the Net Open Position (NOP) variable, it is almost certain that all banks will use foreign currency items in their asset and liability management activities. All commercial banks in the BUKU level 1, 2, 3 and 4 will definitely be involved in demand deposits as a consequence of continuing financial market activities to safeguard the economic activities of a country. By referring to previous research models from Al-Omar, et.al. (2008), Albulescu (2015), Muhmad & Hashim (2015), Menicucci & Paolucci (2016) and Saputri & Oetomo (2016) then identified four determinants of bank profitability variables, namely CAR, NPL, NOP and LDR. These four variables will then be defined conceptually and formulas referring to banking theory applicable in Indonesia, namely CAMEL (Capital, Management, Asset, Earning and Liquidity). Each variable will function as a bank specific factor that will determine the profitability of the bank both grossly as measured by ROA and net measured by ROE. Results of the test with panel data regression show that the NOP variable is always a determining factor in the ROA and the ROE models. This also provides evidence that NOP is indeed very important in determining ROA and ROE for bankers. With the proven NOP as the main determinant, the argument is supported that commercial banks must pay attention to the foreign exchange items in their asset and liability management. In addition to NOP, NPL is also important for determining ROA and ROE of banks.

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Strategic Management of the Main Elements of the Bank's Financial Strategy

Mechanism of an economic regulation ◽

10.21272/mer.2019.86.10 ◽

2020 ◽

pp. 96-109

Author(s):

Tatiana P. Goncharenko

Keyword(s):

Risk Management ◽

Strategic Management ◽

Banking Sector ◽

Financial Analysis ◽

Profit Maximization ◽

Risk Minimization ◽

Financial Strategy ◽

Theoretical Understanding ◽

Liability Management ◽

Asset And Liability Management

The banking sector has typically operated in a highly competitive environment, which has increased significantly as a result of recent structural economic transformations. Such conditions require a more thorough exploration of one of the fundamental elements of a bank's strategic management, i.e its financial strategy, the proper construction and adherence of which will let it successfully adapt to existing and possible changes and ensure effective financial activities. This article systematizes the theoretical understanding of the main elements in the bank's financial strategy during strategic management, which include asset and liability management, risk management, revenue management, expenses and profit/loss. The author analyzes the history of the main object formation in the assets and liabilities management of the bank, as well as the peculiarities of financial analysis of assets and liabilities. In particular, the author studies the issue to ensure a sufficient level of bank liquidity, risk minimization and profit maximization as assets and liabilities management goals. While studying the features of revenue, expenses and profit/loss management, the main approaches and directions for their implementation are identified. As a result, the author of the article proposed to consider the bank’s financial strategy in terms of its main elements, distinguishing such components as the regulation of financial status indices and financial activity results. Key words: strategic management, bank, financial strategy, asset and liability management, risk management, revenue, expense and profit or loss management.

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