Economic Capital Allocation in Retail Banks: Building up a bank wide economic capital allocation model for risk adjusted performance measurement - fundamentals, concepts, methods

In business world it would not even be possible to measure performance of various business branches or on a manager?s basis without capital budgeting, noting that shareholder value is only created if an investment bears higher revenue than a comparable investment on the capital market. But there is a ?little? problem if we want to lead this conclusion over to financial institutions or what in this book will especially be treated, banks. As a bank?s core business is risk transformation and it deals primarily with the money of external individuals, the definition of an investments underlying capital is not that easy. Hence, also performance measurement, which makes only sense if it is risk adjusted, ends up in a problem far away from being trivial. This book is mainly addressed to risk managers in financial business and should help the reader to get an idea about setting up a risk adjusted performance measurement model considering most important risks occurring in banking world.