The Principles of Banking

The 2007-2008-2009 financial market crisis has shown that the original principles of banking sound liquidity risk management have been forgotten during a prolonged bull market run. The ultimate result of this was bank failures such as Northern Rock, Lehmans and HBOS which had profound consequences for the world economy and created a global recession that may yet lead to long-term depression. This book is an essential guide for bankers in every country of the world that reiterates the primary objective of banks and serves as a policy guide for all market practitioners. The original principles of banking such as sound lending policy and liquidity management need to be restated again and emphasized for bankers, regulators and investors. The book investigates the part played by unsound banking practices in the creation of the 2007-2008 financial market crisis. It then lists a "policy guide" for all banks that bankers must observe through good times, which will enable them to survive the bad times. This is followed by in-depth technical analysis that bankers must observe as part of good business banking practice. And banks must recognize that business cycles are just that: cycles. Good times do not last forever and banks must be managed with discipline so that they survive the bad times. This book is a policy guide for the entire business cycle.