Study on Assets Liability Management
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Date
2018-10-16T11:58:01Z
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Abstract
Asset Liability Management is a very broad field which targets management of risk, it includes the assessment of various types of risk that the current assets and forthcoming liabilities are exposed to.
Assets and Liabilities Management is very much importance for a Company. Company’ s are making profit from various services provided to their customers. Companies profit is a functions of revenue earned from the assets and the cost incurred for the liability that has ocurred for aquiring funds for financing the assets. It is of major importance to the banking and financial service industry. Asset liability Management is the process of responsibly managing the balance between the debts and assets owned by the business or other entities. Proper management of Company assets and liabilities can increase the profitability of the company. The uming of these loans and advances and investments comes from liability. So the earnings of a company ultimately depend on liabilities. Company have to incur costs for its liability. For example, they have to give interest to the public and also to the lending institutions. The idea behind this is, to make sure that the liabilities or debt carried by the entity is kept in proportion with assets that are on hand. Most of the business engages in the process of asset liability management, including banks, and other sectors and even small businesses. Effective liability management indicates that the cost of the liability will be less and also it will less volatile. But less cost and less volatility is inversely related. If we give our attention to only to less volatility, then the cost of fund will be high because only the fixed deposit has the characteristics of less volatility .So we have to make coordination between least costs fund and least volatile fund.
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Aland Mahmad Babusab, 1NH16MBA32