Risk-adjusted Lending Conditions
An Option Pricing Approach
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Beschreibung
In order to operate their lending business profitably, banks mustknow all the costs involved in granting loans. In particular, allthe expenses they incur in covering losses must be included.Provided loan risks can be calculated, it is possible in each caseto charge a price that is appropriately adjusted for risk, thusmaking it possible to make high-risk loans.
In "Risk-adjusted Lending Conditions" the author presents a model,to measure and calculate loan risks, showing how it functions andhow it may be applied. His approach has its origins in the ideasput forward by Black/Scholes in 1973, and thus owes much to optionprice theory. From this the author has succeeded in developing asolution such that, whatever a company's debt position and howeverits balance sheet may be structured, any situation can beindividually assessed. Building on this, he demonstrates howcombinations of loans with the lowest possible interest costs canbe tailor-made for any company. The book contains numerousexamples, making it easy for practising bankers to see how themodel may be applied
Autor*in
Werner Rosenberger
Themen in »Risk-adjusted Lending Conditions«
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