Grundprobleme der Bankplanung unter besonderer Berücksichtigung der Institute des langfristigen Kredits (II)

Abstract

Fundamental Problems of Bank Planning with special reference to Banks engaging in Long-term Credit Business (II)

If we proceed from the assumption that in future procurement of funds will prove a bottleneck for banks engaging in long-term credit business, this must be the point of departure for planning considerations. Since for such banks the issue of bonds is the most important source of funds to cover credits, the problems to be faced are - planning of sales of bonds - determination of the date of issue - laying down the terms of issue. The basıs for their solution is the forecast of the funds available to the groups of bond buyers (banks, insurance companies, private investors) which must be oriented to overall economic indicators and permits relatively exact predictions. An important source of funds for central giro institutions, apart from bonds and the taking up of long-term loans, is deposits. A problematic element is that generally the depositors involved are a few big customers whose payments are but few in number, but in every case may cause substantial divergences in payment flows, so that the law of large numbers is hardly applicable in quantifying the liquidity risk. Therefore methods for overall forecasting of the fluctuation of every type of deposit must be developed. Until such time as studies of this type are available, it will be possible to solve this planning problem only by paying greater attention to the congruence of due dates for lending and borrowing business. In planning the application of funds, the point of departure is the forecast of demand for the various types of bank advances, which in turn is correlated in a certain way with overall economic indicators. In connection with the determination of such correlations, efficiency considerations open up an important field of activity particularly for the banking associations. Planning of the credit volume is based on the forecast credit potential, in which connection, apart from the possibilities of procuring funds, legal regulations and long-range objectives play a role. In addition, importance attaches to the employment of marketing instruments, especially policy on terms of business, for the interest-rate elasticity of borrowers is a significant factor in the influence of the interest level on the volume of credit. The balancıng of procurement and application of funds confronts planning with difficult problems on account of the interdependence of all transactions in the financial field and the influences those transactions exert on profitability, liquidity and security: the structures of borrowing and lending business exhibit such great divergences with respect to amounts, maturities and quality that they can be adjusted to changed market data only with differing degrees of rapidity. Up to the present, for lack of suitable methods, the procedure adopted to overcome these difficulties was to apply the principle of congruence of maturities under which the field of business affected most strongly by external factors determined the behaviour of a bank in all other fields. Now, the more one departs from congruence of maturities, the more necessary it becomes to set up comprehensive liquidity and profitability planning in order, in particular, to lessen the risks of follow-up financing. The planning models developed by the scientists to solve these problems are still not practicable, so for the time being the banks must continue to be content with modest planning approaches.