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Managing the Capital and Funding Structure

Value and Capital Management: A Handbook for the Finance and Risk Functions of Financial Institutions, 2015, p.431-450

2015 John Wiley & Sons Ltd ;ISBN: 9781118774632 ;ISBN: 1118774639 ;EISBN: 9781118774359 ;EISBN: 1118774353 ;DOI: 10.1002/9781118774359.ch19

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  • Title:
    Managing the Capital and Funding Structure
  • Author: Wilson, Thomas C
  • Subjects: capital funding management ; cash planning ; financial leverage ; funding structure
  • Is Part Of: Value and Capital Management: A Handbook for the Finance and Risk Functions of Financial Institutions, 2015, p.431-450
  • Description: This chapter focuses on how banks and insurers finance their investments in operating businesses along the debt‐equity continuum. There are many financing alternatives along the debt‐equity continuum used to finance the firm's investment in operating businesses and as operating leverage. These alternatives include asset‐backed financing, senior unsecured bonds, loans and deposits, subordinated debt, hybrid capital and shareholders' paid in capital. The chapter presents a simple model describing how banks and insurers “optimize” their capital structure. Some additional factors which may influence the funding structure of financial services firms, include the existence of explicit or implicit guarantees, minimum regulatory capital requirements, the incentives to take risk and the ability to create value from liabilities. Double leverage can be used to “recapture” group diversification benefits and mitigate the impact of uneconomic capital requirements.
  • Publisher: Chichester, United Kingdom: John Wiley & Sons Ltd
  • Language: English
  • Identifier: ISBN: 9781118774632
    ISBN: 1118774639
    EISBN: 9781118774359
    EISBN: 1118774353
    DOI: 10.1002/9781118774359.ch19
  • Source: Ebook Central Academic Complete
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