Financial Institutions Management: A Risk Management Approach (2024)

Saunders and Cornett's Financial Institutions Management: A Risk Management Approach provides an innovative approach that focuses on managing return and risk in modern financial institutions. The central theme is that the risks faced by financial institutions managers and the methods and markets through which these risks are managed are becoming increasingly similar whether an institution is chartered as a commercial bank, a savings bank, an investment bank, or an insurance company. Although the traditional nature of each sector's product activity is analyzed, a greater emphasis is placed on new areas of activities such as asset securitization, off-balance-sheet banking, and international banking.

PART ONE: Introduction
Ch. 1 Why Are Financial Institutions Special?
Ch. 2 Financial Services: Depository Institutions
Ch. 3 Financial Services: Finance Companies
Ch. 4 Financial Services: Securities Firms and Investment Banks
Ch. 5 Financial Services: Mutual Fund and Hedge Fund Companies
Ch. 6 Financial Services: Insurance Companies
Ch. 7 Risks of Financial Institutions

PART TWO: Measuring Risk
Ch. 8 Interest Rate Risk I
Ch. 9 Interest Rate Risk II
Ch. 10 Credit Risk: Individual Loan Risk
Ch. 11 Credit Risk: Loan Portfolio and Concentration Risk
Ch. 12 Liquidity Risk
Ch. 13 Foreign Exchange Risk
Ch. 14 Sovereign Risk
Ch. 15 Market Risk
Ch. 16 Off-Balance-Sheet Risk
Ch. 17 Technology and Other Operational Risks
Ch. 18 Fintech Risks

PART THREE: Managing Risk
Ch. 19 Liability and Liquidity Management
Ch. 20 Deposit Insurance and Other Liability Guarantees
Ch. 21 Capital Adequacy
Ch. 22 Product and Geographic Expansion
Ch. 23 Futures and Forwards
Ch. 24 Options, Caps, Floors, and Collars
Ch. 25 Swaps
Ch. 26 Loan Sales
Ch. 27 Securitization

About the Author

Anthony Saunders

Anuhony Saunders is the John M. Schiff Professor of Finance and the former Chair of the Department of Finance at the Stem School of Business at New York University. Professor Saunders received his PhD from the London School of Economics and has taught both undergraduate- and graduate-level courses at NYU since 1978. Throughout his academic career, his teaching and research have specialized in financial institutions and international banking. He has served as a visiting professor all over the world, including INSEAD, the Stockholm School of Economics, and the University of Melbourne.

Professor Saunders has held positions on the Board of Academic Consultants of the Federal Reserve Board of Governors as well as the Council of Research Advisors for the Federal National Mortgage Association. In addition, Dr. Saunders has acted as a visiting scholar at the Comptroller of the Currency and at the Federal Reserve Banks of Philadelphia and New York. He was an academic consultant for the FDIC. He also held a visiting position in the research department of the International Monetary Fund. He is editor of Financial Markets, Instruments and Institutions. His research has been published in all the major money and banking and finance journals and in several books. In addition, he has authored or coauthored several professional books, including Credit Risk Measurement: New Approaches to Value at Risk and Other Paradigms, third edition, John Wiley and Sons, New York, 2010. In 2008, he was ranked as the most published author in the last SO years in the top seven journals in finance.

Marcia Cornett

Marcia Millon is the Cornett Robert A. and Julia E. Dorn Professor of Finance at Bentley University. She received her BS degree in economics from Knox College in Galesburg, Illinois, and her MBA and PhD degrees in finance from Indiana University in Bloomington, Indiana. Dr. Cornett has written and published several articles in the areas of bank performance, bank regulation, corporate finance, and investments.

Articles authored by Dr. Cornett have appeared in such academic journals as the Journal of Finance; Journal of Money, Credit, and Banking; Journal of Financial Economics; Financial Management; and Journal of Banking and Finance. She was recently ranked the 124th most published out of more than 17,600 authors and the number five female author in finance literature over the last 50 years. Along with Anthony Saunders and Otgontsetseg Erhemjamts, Dr. Cornett has recently completed work on theeighth edition of Financial Markets and Institutions (McGraw Hill Education). Along with Troy Adair and John Nofsinger, Dr. Cornett has recently completed work on the sixth edition of Finance: Applications and Theory (McGraw Hill Education). Dr. Cornett serves as an Associate Editor for the the Journal of Banking and Finance, Journal of Financial Services Research, Review of Financial Economics, Financial Review, and Multinational Finance Journal.

Dr. Cornett has served as a member of the board of directors, the executive committee, and the finance committee of the SIU Credit Union. Dr. Cornett has also taught at Southern Illinois University at Carbondale, the University of Colorado, Boston College, and Southern Methodist University. She is a member of the Financial Management Association, the American Finance Association, and the Western Finance Association.

Otgo Erhemjamts

Otgo Erhemjamts is the Dean of the School of Managment and Professor of Finance at University of San Francisco.She received her BS and MS degrees in Information Technology from Mongolian University of Science and Technology, her MS degree in Economics Tom University of Idaho, and her PhD degree in Finance from Georgia State University. Dr. Erhemjamts has written and published articles in the areas of risk management, bank performance, life insurer demutualizations, product market competition, industry structure, and corporate social responsibility.

Her research has appeared in academic journals such asJournal of Money, Credit, and Banking; Journal of Banking and Finance; Journal of Risk and Insurance; andJournal of Business Ethics. Dr. Erhemjamts serves as an Associate Editor for theGlobal Finance Journal. She has taught undergraduate- and graduate-level courses in financial institutions, risk management and insurance, financial markets, investments, equity valuation, and sustainable investing it Georgia State University and Bentley University. Dr. Erhemjamts is a member of the Financial Management Association, the American Finance Association, and the Eastern Finance Association.

Financial Institutions Management: A Risk Management Approach (1)


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As an enthusiast and expert in the field of finance and risk management, with a depth of knowledge spanning various aspects of financial institutions and their operations, I can provide insights into the concepts discussed in the article about "Saunders and Cornett's Financial Institutions Management: A Risk Management Approach." Let me begin by addressing each concept mentioned in the article:

  1. Introduction to Financial Institutions Management:

    • This refers to the overarching discipline that focuses on managing return and risk within modern financial institutions. It involves understanding the unique challenges and strategies employed in managing financial institutions across various sectors, including commercial banks, savings banks, investment banks, and insurance companies.
  2. Financial Services Provided by Different Institutions:

    • The article outlines various types of financial services provided by different institutions, including depository institutions, finance companies, securities firms and investment banks, mutual fund and hedge fund companies, and insurance companies. Each type of institution offers specific financial products and services tailored to their respective markets and customer needs.
  3. Risk Management in Financial Institutions:

    • Risk management is a critical aspect of financial institutions management, focusing on identifying, assessing, and mitigating risks that institutions face in their operations. This includes various types of risks such as interest rate risk, credit risk, liquidity risk, foreign exchange risk, market risk, operational risk, and technological risk.
  4. Asset Securitization and Off-Balance-Sheet Banking:

    • Asset securitization involves the process of pooling financial assets (e.g., loans, mortgages) and transforming them into tradable securities. Off-balance-sheet banking refers to activities conducted by financial institutions that are not reflected on their balance sheets, such as certain types of lending or contingent liabilities.
  5. International Banking:

    • International banking encompasses financial activities conducted across national borders, including cross-border lending, foreign currency trading, and international trade finance. It involves navigating regulatory frameworks, currency fluctuations, and geopolitical risks.
  6. Measuring and Managing Risks:

    • Financial institutions employ various techniques to measure and manage risks, including interest rate risk management, credit risk assessment for individual loans and loan portfolios, liquidity management, foreign exchange risk hedging, market risk analysis, and operational risk mitigation.
  7. Regulatory and Compliance Considerations:

    • Financial institutions must adhere to regulatory requirements imposed by government agencies to ensure stability, transparency, and consumer protection within the financial system. Compliance with regulations such as capital adequacy standards, deposit insurance, and liability guarantees is essential for the soundness of financial institutions.
  8. Innovation and Technology in Finance:

    • The article emphasizes the role of innovation and technology in shaping the financial services landscape, including the emergence of fintech solutions, which introduce new opportunities and challenges for financial institutions in managing risks and delivering services efficiently.

Overall, the themes highlighted in the article underscore the dynamic nature of financial institutions management and the importance of adopting a risk management approach to navigate evolving market conditions and regulatory requirements effectively.

Financial Institutions Management: A Risk Management Approach (2024)


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