Finkenwirth, Andre with Georg Doll, "System Dynamics Simulations for the Management of a Commercial Bank", 1988
ua435
Bank institutions occupy a special position in the economy as they have to guarantee a frictionless money movement. Compared with industrial companies, banks do not produce concrete products but provide abstract services with money as their output object. These services- when they are included in balance sheet- are reflected in the accounts as sales relations. Therefore a balance sheet model is applied in order to reflect general decisions in banking and to show how these decisions affect banking business in terms of volume and profit.The analysed bank is the London branch of a Continental bank. The branch acts on the markets as a commercial bank. These kind of representations are the most common ones in the financial center of London.The branch offers four different kind of products: Traditional, specialized, contingent and treasury products. These products determine the statement of asset and liabilities and in addition are also the income earners of the branch.The behaviour of the branch is determined by decision rules, market developments, the juristical position and internal restrictions. This behaviour is tested by adopting different scenarios.The System Dynamics bank model is adaptable to individual circumstances of other banks and therefore it offers practical support for the management of financial institutions.
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