BANKING AND THE ADVANTAGE OF HEDGING

In this paper, we study how a competitive banking firm can use a variable deposit rate to insure against profit risk from risky assets and how the utility of the bank manager is affected by this kind of risk management policy. Furthermore, we study the advantage of a risk management policy which is based on financial hedging. Finally, we answer the question which of these risk management policies the bank manager prefers.

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Year of publication:	2006
Authors:	BROLL, UDO ; WAHL, JACK
Published in:	Annals of Financial Economics (AFE). - World Scientific Publishing Co. Pte. Ltd., ISSN 2010-4960. - Vol. 02.2006, 01, p. 0650002-1
Publisher:	World Scientific Publishing Co. Pte. Ltd.
Subject:	Banking firm \| risky assets \| variable deposit rate \| risk sharing \| hedging \| bank margin \| asset liability management

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Extent:	application/pdf text/html
Type of publication:	Article
Source:	RePEc - Research Papers in Economics

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