Risk Management and Value Creation in ... - Arabictrader.com

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CONTENTS
Definition of RAROC 242
Advantages of RAROC 245
Assumptions of RAROC 247
Deficiencies of RAROC 253
Deficiencies of the Generic RAROC Model 253
Modifying RAROC to Address Its Pitfalls 259
Fundamental Problems of RAROC 261
Evaluation of RAROC as a Single-Factor Model
for Capital Budgeting in Banks 267
New Approaches to Capital Budgeting in Banks 268
Overview of the New Approaches 269
Evaluation of RAROC in the Light of the New Approaches 272
Implications of the New Approaches to Risk Management
and Value Creation in Banks 273
Implications for Risk-Management Decisions 274
Implications for Capital-Budgeting Decisions 279
Implications for Capital-Structure Decisions 279
New Approaches as Foundations for a Normative
Theory of Risk Management in Banks 280
Areas for Further Research 282
Summary 285
CHAPTER 7
Conclusion 287
References 293
Index 311