Simon, Leonard S.
Some Observations on Analytical Marketing in Banking Research and Practice
Mülhaupt, Ludwig and Dolff, Peter
Grundprobleme der Bankplanung unter besonderer Berücksichtigung der Institute des langfristigen Kredits (II)
Bundesrepublik Deutschland und Großbritannien: Währungsreserven und Bankenliquidität
Informationskosten, Anpassungskosten und die Theorie des Kreditmarktes
Alexander, Volbert and Loef, Hans Edi
Die Kontrolle der Geldbasis und ihre Komponenten. Eine empirische Analyse für die BRD
Universalbankentendenzen im britischen Kreditwesen
Schneider, Wilfried und Fuchs, Konrad (Hrsg.)
Management im Kreditwesen. Festschrift für Hans Krasensky (Christian Kunze)
Die Liquiditätstheorie des Geldes (Stefan Wallraven)
Duwendag, Dieter (Hrsg.)
Macht und Ohnmacht der Bundesbank (Rüdiger Pohl)
Währungsintegration und Währungspolitik der Franc-Zone Afrikas (Hans Pfisterer)
Der Einfluß von Geldwertrisiko und Wertsicherungsklauseln auf die Vermögensdisposition (Hartmut Rudloff)
Indexklauseln und Inflation (Hartmut Rudloff)
Marktstrategien im Hypothekarkreditgeschäft (Hans-Jacob Krümmel)
Simon, Leonard S.
"Some Observations on Analytical marketing in Banking Research and Practice"
The structure of banking is changing rapidly due as much to the use of aggressive marketing techniques by banks as to financial reform and technological innovation. This paper explores why this new aggressive attitude has come to the fore and then illustrates how changing operations technology is going to require even greater emphasis on marketing tactics in the future. Increased sophistication as regards the use of operations research and other highly analytical approaches to problem solving is suggested as one of the main vehicles for obtaining greater efficiency in marketing. Illustration of the application of such tools to three areas of management decision-making, competitive bidding for deposits, placement of facilities and increasing the efficiency of business development personnel, is given.
Mülhaupt, Ludwig and Dolff, Peter
"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 basis 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 balancing 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.
"Exchange Reserves and Bank Liquidity"
In attempting to determine exactly the effect of external economic influences on the banks' supply of liquidity, often enough only the trend of exchange reserves with the central bank are considered. But as long as the banks' short-term foreign accounts receivable, that is to say, money exports, are not taken into account at the same time, any statement on liquidity changes must remain incomplete because either pure shifts in bank liquidity as between domestic and foreign investments are assessed as liquidity expansion or contraction, or liquidity effects stemming from foreign business are not covered at all.
To avoid erroneous interpretations, therefore, official and private exchange accounts receivable must be considered together. The higher the share of money exports in a country, the greater will be the distortions. This is illustrated by the examples of the Federal Republic of Germany and Great Britain, which have very different structures.
1. From the statistical view point, the total exchange reserves in Great Britain exhibit mostly only positive changes, that is, they have a permanent tendency to increase liquidity. In the Federal Republic of Germany on the other hand, there are changes in the total exchange reserves which exert both strongly expansive and contractive influences. The influence of the balance of payments as a market factor on bank liquidity is much less uniform in this instance.
2. The distribution of the total exchange reserves between the central bank on the one hand and the banking system on the other differs in these two countries. A comparison of absolute values shows that the exchange reserves of the Bundesbank are roughly 3-4 times as high as the money exports of German banks. In contrast, the official reserves in Great Britain make up only about one eleventh of the money exports of British banks. If we compare the changes, we find that the official exchange reserves in the Federal Republic of Germany are subject to much greater fluctuations than the money exports of German banks. From this it can be concluded that a substantial proportion of all exchange transactions are effected through the Bundesbank. In Great Britain the records show only slight, mostly positive changes in official exchange reserves, while there are more market changes in the money exports of British banks, which are likewise mainly increases.
Whereas developments in the Federal Republic of Germany match up with exchange theory models, Great Britain does not fit into this pattern. Being a country with a continually weak currency threatened by depreciation, one would have expected a persistent decrease in British exchange reserves. It is true that the high British money exports match up with the modell; but with relatively constant exchange reserves they can be carried out only if there are simultaneous high money imports, which are not really to be expected in a country where depreciation seems likely.
This discrepancy between monetary theory on the one hand and British reality on the other can only be explained by the fact that London is the centre of the Euro-Dollar market and hence British liabilities in foreign currencies were always higher than accounts receivable in foreign currencies, making recourse to the central bank superfluous. For this reason the evidentiary value of the official exchange reserves alone for the trend of bank liquidity is still more dubious in Great Britain than in the Federal Republic of Germany.
"Information Costs, Adjustment Costs and the Theory of the Credit Market"
Traditional price theory is unable to give a satisfactory explanation of the different characteristics of the security market and the credit market. Whereas on the security market allocation is controlled exclusively by the market interest rate, the market for bank credits is characterized by inflexible interest rates and price-independent rationing. This article discussed briefly the contributions made to the rationing debate by Samuelson, Scott, Hodgman, Chase, Miller, Jaffee et al.
With the help of a price theory which explicitly allows for information and adjustment costs, various phenomena of the credit market are explained in the main part. The conception of the explanation is founded in particular on the ideas of Alchian. For, in contrast to the acquisition of securities, the granting of a loan is nothing more, economically speaking, than the purchase of a claim of very uncertain quality. The reduction of the uncertainty and the reactions in the case of exogenous disturbances result in positive information and adjustment costs. It is shown that the substantial differences between the credit and security markets are attributable to the difference in the significance of these cost components on the two markets. The allocation criterion for lender and borrower is not the market interest rate, but the interest rate including the information and adjustment costs. To reduce the two cost components as far as possible, the banks have developed various strategies. One possibility, which is nothing short of a definition of the credit market, is the policy of interest rate stabilization. Various elements of bank management theory which have always called forth response from practical bankers can thus be integrated into the theory of the credit market. A narrowing of the gap between theory and practice in banking seems possible.
Alexander, Volbert and Loef, Hans Edi
"Control of the Monetary Base and its Components - An empirical analysis for the Federal Republic of Germany"
A monetaristic policy stands and falls with the ability of the monetary authorities to control the monetary base. The analysis by Willms, according to which the German Bundesbank is able to exert sufficiently good control of the German monetary base, does not seem to give an exact description of and a solution to the problem of control of the base in the FRG.
In contrast to Willm's conclusion, the present analysis shows that, especially in periods of disequilibrium in foreign trade, the Bundesbank did not succeed in exerting sufficient influence on the German monetary base. Willms's results can be attributed to an inexact breakdown of the total monetary base into controllable and uncontrollable components. Moreover, it is evident that the separate analysis of various periods of time gives rise to big differences in the results relating to control of the monetary base.
It is shown in further tests that monetary policy measures were thwarted to by far the greatest extent by the base component "net position of the Bundesbank vis-à-vis foreign countries"; even in periods of calm international economic relations, this base component hindered the measures of the Bundesbank much more than the discount and open market indebtedness of the banks together.
Consequently it follows that, within the world monetary system prevailing in the period investigated (1951-1972), the Bundesbank could not achieve efficient control of the monetary base with its present instruments.
If its desired to pursue such a monetaristic policy, the results of our study for the Federal Republic of Germany show That this is impossible under the system of fixed exchange rates which prevailed without interruption up to 1970. This conclusion is of decisive importance for the current intensive debate on reorganization of the world monetary system.
"Tendencies towards Mixed Banking Institutions in the British Banking System"
For a number of years now, there have been steadily growing indications in Great Britain's banking system of an evolution in the direction of a mixed banking system of German stamt. The original initiative for this process came from the City itself; it was given considerable impetus, however by the banking reform of autumn 1971. This reform enabled the clearing banks, which had been at a disadvantage in the competition with various domestic groups of institutions and also the foreign banks with offices in London, to engage in greater activity with respect to the formerly relatively neglected private customers and by numerous other diversification measures to steer a course towards becoming financial supermarkets. Of necessity, in the course of such endeavours, which were temporarily impeded by occasional backsliding in official liberalization policy, they increasingly find themselves at odds with other categories of institutions - such as the building societies, finance houses or merchant banks - which in their turn are also abandoning the classical-special-purpose bank principle to a continuously increasing extent. Over and above this, the clearing banks must now face up, not only to these rivals and younger ones in the shape of the rapidly expanding money shops, but also to an increasing extent to the continental banks, which in many instances offer a substantially more universal assortment and service. To improve their competitive ability and further the breaking down of the traditional system of division of labour, since early 1973; the Bank of England has been facilitating the exertion of influence, via acquisition of capital interests, on merchant banks with the coveted reputation of acceptance houses, so that the clearing banks can develop into "all-purpose" institutions, not only by the creation of new services "from within", but also by way of specific experience and connections acquired through mergers and the purchase of interests. For all that, the British banking system is still burdened with divers specialization relicts which, however -at least that is the long-range prediction of the IBRO report - notwithstanding the highly acute regulatory plans following the accession to the EFC, the change in government and the crisis phenomena in the secondary banking sphere, should be gradually eliminated.