Comparative Appraisal of Asset Liability Management Between Commercial Bank of Ethiopia (CBE) and Dashen Bank (DB), Ethiopia

KISHOR CHANDRA MEHER

Abstract


ABSTRACT

The paper evaluates the comparative practices of Asset-liability management between public sector bank - Commercial Bank of Ethiopia (CBE) and private sector bank - Dashen Bank (DB) at corporate level in Ethiopia. The study attempts to verify whether there is any significant differences between the CBE bank and DB on Asset Liability Management (ALM) practices in terms of interest rate risk, solvency risk and liquidity risk management, under different framework and fundamental. Secondary data was analyzed using quantitative data analysis technique such as descriptive, ratios analysis to study and compare the ALM in both banks. The findings of the study reveal that the CBE is less exposed to interest rate risk compared to the DB when measured using Net Interest Margin (NIM), Current Ratio, Return on Assets (ROA), Return on Equity (ROE) and others. Besides that, the study finds that CBE is less exposed to credit risk compared to the DB when measured using loan collection (LC)/ loan disbursement (LD) ratios. In addition to that, the CBE also appear to be less exposed to liquidity risk, compared to its DB when measured using Liquidity ratio but is more risky when measured using in trend. The overall ALM practice in CBE is found better than DB.

KEYWORDS: Asset Liability Committee , Asset Liability Management, Current Ratio, Loan Collection/Loan Disbursement, Return on Asset, Return on Equity, Return on Investment ,Solvency Ratio.

 


References


• A.Grosen and P. Jorgensen, Fair valuation of life insurance liabilities: The impact of interest rate guarantees, surrender options and bonus policies. Insurance: Math. Economics, 26(1):37–57, 2000.

• Choudhry, 2011. Bank Asset and Liability Management: Strategy, Trading, Analysis. Singapore:John Wiley & Sons.

• Dermine, J. and J.Y. Bissada (2002): Asset & Liability Management, A Guide to Value Creation

• Diamond, D. (1984): “Financial Intermediation and Delegated Monitoring”, Review of Financial Studies, 51, 393-414.

• Fabozzi F.J. and Atsuo K., (2003), Asset and Liability Management. S. Chand and company: Delhi.

• Hannan T. and A. Berger (1991):”The Rigidity of Prices: Evidence from the Banking Industry”, American Economic Review, 81, 938-945.

• J. Hull. Options, Futures and other Derivative Securities. Prentice Hall, Upper Saddle River, 2000.

• Klein, M.A. (1971): “A Theory of the Banking Firm”, Journal of Money, Credit and Banking, 205-

• Kultar singh,(2007), Qualitative Social research methods

• Longin, F. (2000): “From Value at Risk to Stress Testing: The Extreme Value Approach”, Journal of Banking & Finance, 1097-1130.

• Mac Aula , F.R. (1938): “The Movements of Interest Rates, Bond Yields and Stock Prices in the United States since 1856", National Bureau of Economic Research.

• M. Griebel. Sparse grids and related approximation schemes for higher dimensional problems. In Proceedings of the conference on Foundations of Computational Mathematics (FoCM05), Santander, 2005.

• Monti,M.(1992),"Deposit, Credit and Interest Rate determination under alternative bank objective functions, Mathematical methods in investment and finance,431-454

• Oracle financial services. (2011). Asset Liability Management: An Overview, an Oracle White Paper.

• P. Glasserman. Monte Carlo Methods in Financial Engineering. Springer, 2003.

Internet

• www.combanketh.et or http://www.combanketh.et/AboutUs/CorporateMessage.aspx, 10/03/2015) .

• www.dashenbanksc.com

Annual Reports

• Annual reports of CBE,2009/10 to 2012/13

• Annual reports of DB,2009/10 to 2012/13

Magazines/journals

• Mudaye Niway,Vol.3,No.3, June 2010

• Mudaye Niway,Vol.3,No.4, June 2011

• Mudaye Niway,Vol.3,No.3, June 2012

• Mudaye Niway,Vol.3,No.4, June 2013

• Birritu,,Vol.12,N0.113,June,2010

• Birritu,,Vol.22,N0.144,June,2011

• Birritu,,Vol.28,N0.157,June,2012

Brochures/flyers

• Different brochures, flyers and published financial statements printed and distributed by CBE,DB,NBE from 2010-2014


بازی انفجار Full Text: PDF

Refbacks

  • There are currently no refbacks.


Creative Commons License
This work is licensed under a Creative Commons Attribution 3.0 License.

ISSN : 2251-1547