All states financial corporation case study solutions an

Question

BUS326 COMMERCIAL BANKING

GROUP PROJECT:
AN ANALYSIS OF  PART A - ALL STATES FINANCIAL CORPORATIONAND PART B - SHADOW BANKING

GENERAL REQUIREMENTS:

Working in groups of 3 to 5, develop logical and coherent responses to the questions raised below. The opinions or decisions that are presented should be supported by references to appropriate texts, articles, websites and current banking practice.

Although all students are expected to play an important role in the development of the paper, the final submission should be presented as a comprehensive group project.

The following lists of deadline and requirements should be adhered to. Failure to do so will result in a lower grade on the project.

FORMAT REQUIREMENTS:

 

The group paper should

• be typed and double spaced;
• flow as a well documented coherent, committee paper;
• cite all sources;
• have correct formats for the bibliography, footnotes and references;
• have on the first page of the paper, the title of the paper, the authors' names and respective tutorial groups; and
• have an executive summary (Part A) and abstract (Part B).

Part A: An Analysis of All States Financial Corp.   (2000 Words) 

Quality is the most appropriate determinant of the grade awarded but it is suggested that approximately 2,500 words be a sufficient length.

The group paper should have an executive summary. 

QUESTIONS

1.    Discuss limitations in the reliability of the inter­est rate-sensitivity gap. As implied in the case, the methodology is to classify assets and liabilities in terms of the time to certain repricing events (matu­rity, adjustment upon a change in market rates, am­ortization of a portion of principal, expected pre­payment of certain assets, and early withdrawal of liabilities before maturity). What factors would you cite to show weaknesses in the precision of and methodology for creating the interest rate-sensitiv­ity gap report?

2.    Assume an immediate and sustained I percent across-the-board rise in interest rates. Based on a review of Table 3, discuss how one would use in­terest rate-sensitivity gap information to estimate the impact of rising interest rates on the earnings of All States Financial Corporation.

3.    Describe in your own words All States Financial's meth­odology for determining "accounting risk" and "economic risk" and the distinctions between them.

4.    What would you suppose to be some practical difficulties in the art of earnings simulation model­ing? Why is it a preferred method for measuring interest rate risk?

5.    What difficulties do you suppose All States Financial faces in creating a reliable "market value model?"

6.    Suppose All States Financial strongly believes interest rates will rise materially in 2007 and estimates that the rise will cause a drop in earnings. Discuss the practical steps it could take to reduce the size of the earnings reduction. Describe both on-balance sheet measures and off-balance sheet measures the corporation might take.

Part B: Shadow Banking:Sharma (2014)  (1000 Words)   

Discuss the business model for a non-bank financial intermediary in terms of returns, risk, and risk mitigation. You should include an analysis of the firm's financialstatements and Annual Report. Does this industry tacitly rely on government support and lack of regulation?

Quality is the most appropriate determinant of the grade awarded but it is suggested that approximately 1,500 words be a suitable length.

Additional Notes 

Referencing: 

Harvard Reference style (Author-date).

References should support your arguments or assertions, that would mean at least one per paragraph if you build your narrative in a logical manner. If you have included a paragraph without a reference you should probably question if it needs to be there.

Calculations and reference tables may be included as Appendices (not in the word count). Just because something is in the appendix does not exempt it from the referencing requirement.

Groups are expected to resolve any issues internally and the submission should be a group effort. If a group member wishes to submit a minority report this can only be done with group acknowledgement beforehand.

Word Count: 3000

Attachment:- FullRequirement.ZIP