An Examination of Liquidity Risk of Standard Chartered Bank

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ACKNOWLEDGEMENT

I would like to take this chance for thanking my research facilitator, friends & family for support they provided & their belief in me as well as guidance they provided without which I would have never been able to do this research.

DECLARATION

I, (Your name), would like to declare that all contents included in this thesis/dissertation stand for my individual work without any aid, & this thesis/dissertation has not been submitted for any examination at academic as well as professional level previously. It is also representing my very own views & not essentially which are associated with university.

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ABSTRACT

Liquidity risk is the result of transformation of the role of a bank whose term of employment is generally higher at the end of resources, processing inherent in banking. It applies to financial investments that are difficult to liquidate (that is to say, for sale) very quickly. This does not prevent processing but can be assessed in the event of a liquidity crisis and given the schedule of assets and liabilities, how long and at what price the bank will honour its commitments. This question has two aspects, the measurement of liquidity risk and its management. In our analysis of the liquidity situation of Standard Chartered Bank Plc, we have seen that the liquidity position of the bank is, quite good and they have always taken their liquidity as a thing of great importance. The management of Standard Chartered has been doing a great job to make sure that they do not have to face any liquidity concerns in the near future.

Table of Contents

ACKNOWLEDGEMENTII

DECLARATIONIII

ABSTRACTIV

CHAPTER 1: INTRODUCTION1

Background of the Research1

Liquidity Risk Management in Banks2

Aims and objectives of the Research3

Research Questions3

Significance of the Research4

Introduction of Standard Chartered Bank plc4

Products and Services Offered By Standard Chartered Bank6

CHAPTER 2: LITERATURE REVIEW7

Concept of Risk7

Risk Management8

Commercial Banking and Different Types of Risk9

Concept of Liquidity14

Measurement of liquidity15

Analysis of liquidity17

Liquidity Risks in banks18

Liquidity Index21

Sources of Liquidity Risk22

Pricing of Liquidity Risk25

Fragmentation and Liquidity Risk28

CHAPTER 3: METHODOLOGY33

Research Philosophy34

Research Design35

Rationale for Chosen Methodology37

Collection of Financial information38

Analysis of Data39

Scope of the Research39

Assumptions39

CHAPTER 4: DISCUSSION AND ANALYSIS41

Financial Ratio Analysis41

Liquidity Risk Analysis of Standard Chartered Bank42

Cash to Deposit Ratio43

Borrowing to Deposits Ratio44

Advances to Deposits Ratio46

Return on Equity Ratio48

Return on Assets49

Yield on Assets51

Growth in profit53

Net Interest Margin54

Liquidity Gap Analysis56

Maturity Profile Analysis60

CHAPTER 5: SUMMARY AND CONCLUSION64

Conclusions64

Limitations of the Research65

Suggestion for Further Research65

REFERENCES67

CHAPTER 1: INTRODUCTION

Background of the Research

Liquidity risk is the result of transformation of the role of a bank whose term of employment is generally higher at the end of resources, processing inherent in banking. It applies to financial investments that are difficult to liquidate (that is to say, for sale) very quickly. This does not prevent processing but can be assessed in the event of a liquidity crisis and given the schedule of assets and liabilities, how long and at what price the bank will honour its commitments. This question has two aspects, the measurement of liquidity risk and its management (Wahlen 1994, 455).

Markets, in times of market stress, ...