The CAMELS Approach
Other Factors to Consider when Analyzing a Bank
While the CAMELS approach to evaluating a bank is reasonably comprehensive, it does not address some of the banks’ attributes. In this section, we will discuss bank attributes that are either unaddressed or not adequately addressed by a CAMELS analysis….
Financial Regulations of Financial Institutions
We mentioned in the previous learning outcome statement that financial institutions’ systemic importance results in heavy regulation of their activities. Financial regulation is a form of supervision, subjecting financial institutions to specific requirements, restrictions, and guidelines in an attempt to…
How Financial Institutions Differ from Other Companies
A financial institution is an intermediary between providers and recipients of capital or debt that provides banking, insurance, and investment services. There are various types of financial institutions consisting of banks (deposit-taking, loan-making institutions), investment banks, clearinghouses, credit card companies,…
Analyzing the Impact of Foreign Currency Fluctuations on Financial Results
So far, we have mostly analyzed a multinational parent company with only one subsidiary. It made the analysis easier as we were able to relate the effect of the translation method chosen to the consolidated financial statements for the specific…
Impact of Changes in the Components of Sales on Sales Growth Sustainability
Changes in volume and prices primarily propel sales growth for a multinational corporation. Besides that, exchange rate changes between the reporting currency and the currency in which sales are made also drive sales growth. Reasonably, growth in sales that comes…
Impact of Multinational Operations on a Company’s Effective Tax Rate
Accounting standards require companies to explain the relationship between tax expense and accounting profit. This explanation is presented as a reconciliation between the average effective tax rate and the applicable statutory rate. The effective tax rate is computed as the…
Financial Crime in Times of COVID-19 – AML and Cyber Resilience Measures
After completing this reading, you should be able to: Explain the increase of cyber threats faced by financial institutions because of the Covid-19 crisis. Explain the cyber resilience measures taken by international and national financial authorities in response to the…
Global Financial Stability Report: Markets in the Time of COVID-19
After completing this reading, you should be able to: Describe the developments in financial and commodity markets during March-April 2020. Discuss the global financial vulnerabilities intensified by the slowdown in economic activity and tightened financial conditions following the COVID-19 outbreak. …
