NYU Stern

Books by Faculty

Guaranteed to Fail: Fannie Mae, Freddie Mac and the Debacle of Mortgage Finance
Editors: Viral V. Acharya, Matthew Richardson, Stijn van Nieuwerburgh, and Lawrence J. White
Princeton University Press, 2011

The financial collapse of Fannie Mae and Freddie Mac in 2008 led to one of the most sweeping government interventions in private financial markets in history. The bailout has already cost American taxpayers close to $150 billion, and substantially more will be needed. The U.S. economy--and by extension, the global financial system--has a lot riding on Fannie and Freddie. They cannot fail, yet that is precisely what these mortgage giants are guaranteed to do. How can we limit the damage to our economy, and avoid making the same mistakes in the future?
 
Guaranteed to Fail explains how poorly designed government guarantees for Fannie Mae and Freddie Mac led to the debacle of mortgage finance in the United States, weighs different reform proposals, and provides sensible, practical recommendations. Despite repeated calls for tougher action, Washington has expanded the scope of its guarantees to Fannie and Freddie, fueling more and more housing and mortgages all across the economy--and putting all of us at risk. This book unravels the dizzyingly immense, highly interconnected businesses of Fannie and Freddie. It proposes a unique model of reform that emphasizes public-private partnership, one that can serve as a blueprint for better organizing and managing government-sponsored enterprises like Fannie Mae and Freddie Mac. In doing so, Guaranteed to Fail strikes a cautionary note about excessive government intervention in markets.
 
The Little Book of Valuation
Aswath Damodaran
John Wiley and Sons, 2011
 
Valuation is at the heart of any investment decision, whether that decision is to buy, sell, or hold. In The Little Book of Valuation, expert Aswath Damodaran explains the techniques in language that any investors can understand, so you can make better investment decisions when reviewing stock research reports and engaging in independent efforts to value and pick stocks.
 
Page by page, Damodaran distills the fundamentals of valuation, without glossing over or ignoring key concepts, and develops models that you can easily understand and use. Along the way, he covers various valuation approaches from intrinsic or discounted cash flow valuation and multiples or relative valuation to some elements of real option valuation.
 
Includes case studies and examples that will help build your valuation skills
Written by Aswath Damodaran, one of today's most respected valuation experts
Includes an accompanying iPhone application (iVal) that makes the lessons of the book immediately useable
 
 
Written with the individual investor in mind, this reliable guide will not only help you value a company quickly, but will also help you make sense of valuations done by others or found in comprehensive equity research reports.
 
Applied Corporate Finance, 3rd Edition
Aswath Damodaran
John Wiley and Sons, 2011
 
Readable and usable in style and valuable in approach, this text provides the practical and succinct advice that students and practitioners need, rather than a sole concentration on debate theory, assumptions, or models. Like no other text of its kind, the author applies corporate finance to real companies. The new Third Edition has four real-world core companies to study and follow. Perfected suited for MBA programs’ corporate finance and equity valuation courses, all business decisions are classified into three groups: the investment, financing, and dividend decisions.
 
Investments and Portfolio Performance
Editors: Edwin J. Elton and Martin J. Gruber
World Scientific Publishing, 2011
 
This book contains the recent contributions of Edwin J Elton and Martin J Gruber to the field of investments. All of the articles in this book have been published in the leading finance and economic journals. Sixteen of the nineteen articles have been published in the last ten years. This book supplements the earlier contributions of the editors published by MIT Press in 1999.
  
Contents:
Estimating Tax Rates and Ex-Dividend Behavior
Factors Affecting Corporate Bond Pricing
Performance Measurement of Mutual Funds
Mutual Fund Behavior
 Special Types of Funds
Return Generating Process
 Pension Funds
 Optimum Portfolio Construction 
 
Regulating Wall Street: The Dodd-Frank Act and the New Architecture of Global Finance
Editors: Viral V. Acharya, Thomas F. Cooley, Matthew P. Richardson and Ingo Walter John
Wiley and Sons, 2010

In Regulating Wall Street, leading academics from the New York University's Stern School of Business turn their attentions to the first in-depth independent study of the Dodd-Frank Act.
The U.S. Congress has passed the most significant changes in financial regulation since the 1930s with the Dodd-Frank Act. This research discusses whether the resulting regulations will promote growth and prevent another near collapse of our financial system, or contribute to its catastrophic failure. 
In Regulating Wall Street: The New Architecture of Global Finance, an impressive group of the Stern school’s top authorities on finance combine their expertise in capital markets, risk management, banking, and derivatives to assess the strengths and weaknesses of new regulations in response to the recent global financial crisis.
•    Summarizes key issues that regulatory reform should address
•    Evaluates the key components of regulatory reform
•    Provides analysis of how the reforms will affect financial firms and markets, as well as the real economy
 
FINANCIAL INSTITUTIONS MANAGEMENT: A Risk Management Approach, Seventh Edition
Anthony Saunders and Marcia Millon Cornett
Irwin/McGraw-Hill, 2010
 
This book provides an innovative approach that focuses on managing return and risk in modern financial institutions. The central theme is that the risks faced by financial institutions managers and the methods and markets through which these risks are managed are becoming increasingly similar whether an institution is chartered as a commercial bank, a savings bank, an investment bank, or an insurance company. Although the traditional nature of each sector’s product activity is analyzed, a greater emphasis is placed on new areas of activities such as asset securitization, off-balance-sheet banking, and international banking.
 
Derivatives: Principles and Practice
Rangarajan K. Sundaram and Sanjiv Das
Mcgraw-Hill, 2010
It has been the authors’ experience that the overwhelming majority of students in MBA derivatives courses go on to careers where a deep conceptual, rather than solely mathematical, understanding of products and models is required. The first edition of Derivatives looks to create precisely such a blended approach, one that is formal and rigorous, yet intuitive and accessible.
The main body of this book is divided into six parts. Parts 1-3 cover, respectively, futures and forwards; options; and swaps. Part 4 examines term-structure modeling and the pricing of interest-rate derivatives, while Part 5 is concerned with credit derivatives and the modeling of credit risk. Part 6 discusses computational issues.
 
Paper Fortunes - Modern Wall Street
Roy C. Smith
St. Martin's Press, 2010
 
A LONG, WILD RIDE
Paper Fortunes is the richly-detailed story of Wall Street from post-war heyday to present woes, from a player whose experiences, profiles of the colorful personalities involved and learned observations of the forces shaping the business make it insightful and timely. Smith, a long-time Goldman Sachs banker and now a distinguished NYU professor of finance, enables anyone working on the Street, investing with it, or just appalled by its worst shenanigans to understand how the industry has grown, changed and evolved, and what its future prospects are.
 
From the various permutations of Goldman Sachs, and Lehman through to Richard Fuld, Henry Paulson and Tim Geithner, Paper Fortunes tells the ongoing story of the shifting U.S. market economy through the actions of the people who've shaped it for the last sixty years and will shape it for the next sixty.
 
Modern Portfolio Theory and Investment Analysis, 8th Edition
Edwin J. Elton, Martin J. Gruber, Stephen J. Brown, and William N. Goetzmann
John Wiley & Sons, Inc., 2010
 
An update of a classic book in the field, Modern Portfolio Theory examines the characteristics and analysis of individual securities as well as the theory and practice of optimally combining securities into portfolios.   It stresses the economic intuition behind the subject matter while presenting advanced concepts of investment analysis and portfolio management. Readers will also discover the strengths and weaknesses of modern portfolio theory as well as the latest breakthroughs.
An update of a definitive investment text, Modern Portfolio Theory is a comprehensive guide to asset allocation, portfolio optimization, asset pricing models, and securities analysis, with an emphasis on practical, empirical methodology and technique. The 8th edition been updated with new developments in behavioral finance and choice theory, recent results in asset pricing models, new research on hedge funds and mutual funds, and novel approaches to optimization, including the liability framework and simulation methods for investment decision making and risk analysis.
 
Restoring Financial Stability: How to Repair a Failed System
Editors: Viral Acharya and Matthew Richardson
John Wiley & Sons, 2009
 
An insightful look at how to reform our broken financial system
The financial crisis that unfolded in September 2008 transformed the United States and world economies. As each day's headlines brought stories of bank failures and rescues, government policies drawn and redrawn against the backdrop of an historic Presidential election, and solutions that seemed to be discarded almost as soon as they were proposed, a group of thirty-three academics at New York University Stern School of Business began tackling the hard questions behind the headlines. Representing fields of finance, economics, and accounting, these professors-led by Dean Thomas Cooley and Vice Dean Ingo Walter-shaped eighteen independent policy papers that proposed market-focused solutions to the problems within a common framework. In December, with great urgency, they sent hand-bound copies to Washington. Restoring Financial Stability is the culmination of their work.
  • Proposes bold, yet principled approaches-including financial policy alternatives and specific courses of action-to deal with this unprecedented, systemic financial crisis
  • Created by the contributions of various academics from New York University's Stern School of Business
  • Provides important perspectives on both the causes of the global financial crisis as well as proposed solutions to ensure it doesn't happen again
  • Contains detailed evaluations and analyses covering many spectrums of the marketplace
Edited by Matthew Richardson and Viral Acharya, this reliable resource brings together the best thinking of finance and economics from the faculty of one of the top universities in world.
 
Principles of Money, Banking and Financial Markets, 12th Edition
Lawrence S. Ritter, William L. Silber and Gregg Udell
Addison Wesley, 2009
 
Well-known for its engaging, conversational style, this text makes sophisticated concepts accessible, introducing students to how markets and institutions shape the global financial system and economic policy. Principles of Money, Banking, & Financial Markets incorporates current research and data while taking stock of sweeping changes in the international financial landscape produced by financial innovation, deregulation, and geopolitical considerations.
 
THE DARK SIDE OF VALUATION, 2ndEdition
Aswath Damodaran
FT Press, 2009
 
The first edition of the Dark Side of Valuation is showing its age and its origins. The idea for that book was born at the end of 1999, towards the end of the Dot-com boom and was triggered by two phenomena; the seeming inability of traditional valuation models to explain stratospheric stock prices for technology (especially new technology) companies and the willingness of analysts to abandon traditional valuation metrics and go over to the “dark side” of valuation, where prices were justified using a mix of new metrics and story telling. The publication of the first edition coincided with the bursting of that bubble.
 
As markets have evolved and changed, the focus has shifted. The bubble and the concurrent rationalization using new paradigms and models has shifted to new groups of stocks (Chinese and Indian equities) and into new classes of assets (sub-prime mortgages).  I have come to the realization that the dark side of valuation beckons any time analysts have trouble fitting companies into traditional models and metrics. The second edition of the book will reflect that broader perspective. Rather than focus on just young, high-tech (internet) companies as I did in the first edition, I want to look at companies that are difficult to value across the spectrum.
 
The first part of the book will review the basic tools that you have available in valuation. In particular, it will provide, in compressed format, a summary of conventional discounted cash flow models, probabilistic models (simulations, decision trees etc), relative valuation models and real options. Much of what will be included in this section has already been said in my other books on valuation.
 
The second part of the book will examine some of the estimation questions and issues surrounding macro inputs that affect all inputs. The first chapter in this section looks at the riskfree rate, the building block for all other inputs, and challenges the notion that government bond rates are always good estimates of riskfree rates. The second chapter expands the discussion to look at equity risk premiums, another number that is often taken as a given in valuation, primarily because risk premiums in mature markets have been stable for long periods. In shifting and volatile markets, risk premiums can change significantly over short periods and failing to recognize this reality will create skewed valuations. The third chapter examines other macro economic assumptions that are often implicit in valuations about growth in the real economy, exchange rates and inflation and how inconsistencies in these valuations affect the conclusions that we draw.
The third part of the book will look at valuation challenges across a firms life cycle.
 
Anticipating Correlations
Robert F. Engle
Princeton University Press, 2008
Financial markets respond to information virtually instantaneously. Each new piece of information influences the prices of assets and their correlations with each other, and as the system rapidly changes, so too do correlation forecasts. This fast-evolving environment presents econometricians with the challenge of forecasting dynamic correlations, which are essential inputs to risk measurement, portfolio allocation, derivative pricing, and many other critical financial activities. In Anticipating Correlations, Nobel Prize-winning economist Robert Engle introduces an important new method for estimating correlations for large systems of assets: Dynamic Conditional Correlation (DCC).

Engle demonstrates the role of correlations in financial decision making, and addresses the economic underpinnings and theoretical properties of correlations and their relation to other measures of dependence. He compares DCC with other correlation estimators such as historical correlation, exponential smoothing, and multivariate GARCH, and he presents a range of important applications of DCC. Engle presents the asymmetric model and illustrates it using a multicountry equity and bond return model. He introduces the new FACTOR DCC model that blends factor models with the DCC to produce a model with the best features of both, and illustrates it using an array of U.S. large-cap equities. Engle shows how overinvestment in collateralized debt obligations, or CDOs, lies at the heart of the subprime mortgage crisis--and how the correlation models in this book could have foreseen the risks. A technical chapter of econometric results also is included.
Based on the Econometric and Tinbergen Institutes Lectures, Anticipating Correlations puts powerful new forecasting tools into the hands of researchers, financial analysts, risk managers, derivative quants, and graduate students.
 
Managing Credit Risk, 2nd Edition
John B. Caouette, Edward I. Altman, Paul Narayanan
Wiley and Sons, 2008
 
Managing Credit Risk, Second Edition opens with a detailed discussion of today’s global credit markets—touching on everything from the emergence of hedge funds as major players to the growing influence of rating agencies. After gaining a firm understanding of these issues, you’ll be introduced to some of the most effective credit risk management tools, techniques, and vehicles currently available. If you need to keep up with the constant changes in the world of credit risk management, this book will show you how.
 
When Washington Shut Down Wall Street: The Great Financial Crisis of 1914 and the Origins of America's Monetary Supremacy
William L. Silber
Princeton University Press, 2007
 
Professor, author and prominent economic advisor Silber chronicles an era when the U.S.'s reliance on the gold standard was leading it head-on into its first major financial crisis. The outbreak of WWI in 1914 yielded the biggest gold outflow in a generation, jeopardizing America's reputation with creditor nations and sending the world market value of the dollar into a tailspin. Enter Treasury Secretary William McAdoo, lawyer turned financier, who closed the New York Stock Exchange for four months, beginning on July 31, 1914. Silber follows McAdoo's trials and tribulations as he creates the Federal Reserve and averts disaster with a clinical, well-sourced narrative, bringing to light a crisis-management plan that remains relevant today. Though his methodical approach ensures that the book is an easy-to-follow read, Silber tacitly acknowledges the material's dryness by inserting questions throughout the text ("Did gold imports help to alleviate the crisis?") in a weak attempt to add suspense. While pages full of facts and figures get tedious, Silber's story communicates well the urgency and peril of this pivotal American moment.
 
Empirical Market Microstructure
Joel Hasbrouck
Oxford University Press, 2007
 
The interactions that occur in securities markets are among the fastest, most information intensive, and most highly strategic of all economic phenomena. This book is about the institutions that have evolved to handle our trading needs, the economic forces that guide our strategies, and statistical methods of using and interpreting the vast amount of information that these markets produce. The book includes numerous exercises.
 
Governing the Modern Corporation
Roy C. Smith and Ingo Walter
Oxford University Press, 2006
 
Nearly seventy years after the last great stock market bubble and collapse in 1929, another bubble emerged and burst in the late 1990s and early 2000s, despite a protective layer of regulation designed since the 1930s to help prevent such things or at least contain the damage. The most recent bubble was enormous, reflecting nearly twenty years of double-digit stock market growth, and its bursting had predictably painful consequences. The search for culprits and market excesses began quickly, and many were discovered. The targets included not only a number of overreaching corporations, but also their auditors, investment bankers, lawyers and their investors. Governing the Modern Corporation analyzes the structure of market capitalism and what went wrong during one of the must turbulent times in American and indeed global finance.
 
The book begins by examining the developments that have made modern financial markets now capitalized globally at about $70 trillion so enormous, so volatile and such a source of wealth (and temptation) for all players. They report on the evolving role and function of the business corporation, the duties of its officers and directors, and the power of chief executive officers who are incentivized to manage the company to achieve as favorable a stock price as possible. In what follows, the roles and business practices of the principal financial intermediaries, notably auditors and bankers, are examined in detail. It is found that corporations, investors and intermediaries have often been infected by deep-seated conflicts of interest, which add significant agency costs to the free-market system. The imperfect and politicized role of the regulators is also explored, with disappointing results. The entire system is seen to have been compromised by a variety of bacteria that crept-in over the years and became virtually invisible during the bubble years. Belatedly, these issues are now being addressed, in part by new regulation, in part by prosecutions and class action lawsuits, and in part by market forces responding to sometimes mind-boggling revelations of misconduct. We suggest that all of the market’s professional players executives, investors, experts and intermediaries themselves - need to refocus on their core fiduciary obligations to the shareholders, clients, and investors whom they represent. More needs to be done to find ways for these fiduciaries to be held accountable for the appropriate and disciplined discharge of their duties.
 
Corporate Financial Distress and Bankruptcy, 3rd Edition
Edward I. Altman and Edith Hotchkiss
John Wiley & Sons, 2006
 
A comprehensive look at the enormous growth and evolution of distressed debt, corporate bankruptcy, and credit risk default This Third Edition of the most authoritative finance book on the topic updates and expands its discussion of corporate distress and bankruptcy, as well as the related markets dealing with high-yield and distressed debt, and offers state-of-the-art analysis and research on the costs of bankruptcy, credit default prediction, the post-emergence period performance of bankrupt firms, and more.
 
Damodaran on Valuation, 2ndEdition
Aswath Damodaran
John Wiley & Sons, 2006
In order to be a successful CEO, corporate strategist, or analyst, understanding the valuation process is a necessity. The second edition of Damodaran on Valuation stands out as the most reliable book for answering many of today s critical valuation questions. Completely revised and updated, this edition is the ideal book on valuation for CEOs and corporate strategists. You'll gain an understanding of the vitality of today s valuation models and develop the acumen needed for the most complex and subtle valuation scenarios you will face.
 
Recovery Risk
Editors: Edward Altman, Andrea Resti, and Andrea Sironi
Risk Books, 2005
 
In this ground-breaking new title, Risk Books unite three prominent editors to provide a much-needed reference text on loss given default (LGD) measurement and management and the requirements of the Basel II Capital Accord. The measurement of LGD – the share of an exposure that is actually lost when a borrower defaults – is a critical area of the science of credit analysis. Topics covered include:
• Using multivariate models for the estimation of LGD
• Exploring the links between LGD and default risk
• Providing a Basel II compliant framework for LGD estimation
• Helping you to transform research results into operational tools for setting up Basel II compliant rating systems
• Full accounts of the latest developments in the field of LGD analysis. Also includes a full summary of results of academic research in LGD measurement over the past 10 years, including the latest research findings from the main empirical and theoretical academics.
 
Tall Tales about Stocks
Aswath Damodaran
Financial Times Prentice Hall, 2004
As investors, you have all been on the receiving end of sales pitches from brokers, friends and investment advisors about stocks that they claim will deliver spectacular returns. These stories not only sound persuasive and reasonable but are also backed up by evidence - anecdotal, in some cases, and statistical, in others - that the strategies work. When you try to implement them for your investments, though, you seldom can match their success on paper. All too often, you end up with buyers remorse, poorer for the experience and promising yourselves that you will not fall for the allure of these stories again. All too often, you forget the lessons of past mistakes and are easy prey for the next big stock story.
 
While there are literally hundreds of schemes to beat the market in circulation, they are all variants of about a dozen basic themes that have been around for as long as there have been stocks to buy and sell. These broad themes are modified, given new names and marketed as new and different investment strategies by salespeople to a new generation of investors. There must be something in these stories that appeals to investor instincts and to human weaknesses - greed, fear and hubris, to name but three- to give them the staying power that they do. This book is an exploration of the appeal of these stories, why so many fall for them and fail with them, and what it may take to win with each of them.
               
As you will see, with each story, there is a kernel of truth that makes it believable and a base in financial theory that allows proponents to claim to have a solid rationale. Each chapter will begin with an examination of the basis for each investment story and the theory that would justify its adoption. Why bother with the theory? Not only will it give you perspective on what makes each story work, but it will also allow you to identify potential weaknesses with the story.
               
If you have been on the receiving end of one of these investment stories, you probably have also been told of studies that back them up and you are offered evidence of their potency. It should come as no surprise, given the source, that most of these studies give you only a portion of the truth. As you will see in this book, every investment strategy ever devised has succeeded for some periods and with some stocks, but the complete picture requires an assessment of whether it works over long periods and with a wide cross section of stocks. That is why you will see a review of the existing empirical evidence, drawn from both believers and skeptics, on each strategy and some of the potential problems with each. 
 
With every investment strategy, investors also grapple with the question of what adopting that strategy will mean in terms of investment choices. If you adopt a strategy of buying low PE stocks, you have to make a judgment of what represents a low PE ratio and what types of stocks have low PE ratios? If you believe that your best investments are in small companies you have to decide how to measure the size of companies - sales, market capitalization etc.- and what level would represent a small company. You will be presented with rules of thumb, that a PE of 8 is cheap or that a company with a market capitalization less than $ 100 million is small, but these rules of thumb can be dangerous as markets themselves change over time. To provide a frame of reference, this book will examine the distribution of various measures - PE, price to book and market capitalization, to name a few- across the entire market. This should then allow you to get a sense of differences across the market and to develop portfolio standards.
 
The best test of any strategy is to apply it to the market and to peruse the portfolio that you would have ended up with as a result of following it. This book will attempt to do this with each of the broad strategies examined and you can ask yourself whether you would be comfortable investing in the stocks that make up this portfolio. If you are not, it is a warning sign that this strategy may not be appropriate for you. If you are a careful investor, putting this portfolio under a microscope will allow you to probe the strategy for weaknesses and examine what you can do to minimize the damage.
               
It is worth emphasizing what this book is about and what it will not try to do. It is not about promoting or debunking investment strategies, since there are plenty of analysts and brokers who do the former and lots of cynics, many from academia, who do the latter. But it is about providing a full picture of each investment strategy, so that you can make your own judgments about what works and what does not. It is not about giving you the answers to every investment question that has ever been asked; no one can have the foresight to do this. But it is about providing you with the ammunition to ask the right questions when confronted with promoters of these strategies. It is not a book for pessimists who are convinced that picking stocks is an exercise in futility, but it is a book for optimists who want to figure out how to make active strategies pay off and how to use them prudently. It is not about things you cannot and should not do while investing but it is about things you can and should do as an investor to improve your odds for success. 
 
As long as there have been financial markets, there have been mountebanks and frauds luring investors into get-rich schemes that ultimately fail. In the aftermath of these failings, you are often tempted to turn to the courts and to governments to protect you from yourselves. The best antidote, though, to an unscrupulous sales pitch about stocks that cannot lose or to a get rich quickly scheme is a skeptical and informed investor. I hope this book helps in this endeavor.
 
Mergers and Acquisitions in Banking and Finance
What Works, What Fails and Why?
Ingo Walter
Oxford University Press, 2004
 
The financial services sector is about halfway through one of the most dramatic periods of restructuring ever undergone by a major global industry a restructuring whose impact has carried well beyond shareholders of the firms and involved into the domain of regulation and public policy as well as global competitive performance and economic growth. Financial services are a center of gravity of economic restructuring activity. M&A transactions in the financial sector comprise a surprisingly large share of the value of merger activity worldwide -- including only deals valued in excess of $100 million, during the period 1985-2000 there were approximately 233,700 M&A transactions worldwide in all industries, for a total volume of $15.8 trillion. Of this total, there were 166,200 mergers in the financial services industry (49.7%), valued at $8.5 trillion (54%). In all of restructuring frenzy, the financial sector has probably had far more than its share of strategic transactions that have failed or performed far below potential because of mistakes in basic strategy or mistakes in post-merger integration. It has also had its share of rousing successes. The volume lay-out, in a clear and intuitive but also comprehensive way, what we know or think we know about mergers and acquisitions in the financial services sector. It evaluates their underlying drivers, factual evidence as to whether or not the basic economic concepts and strategic precepts are correct, and managerial dimensions in terms of the efficacy of merger implementation, notably the merger integration process. The focus is on enhancing shareholder value creation and the execution of strategies for the successful management of mergers. It also has a strong public-policy component in this specialindustry where successes can pay dividends and failures can cause serious problems that reach well beyond the financial services industry itself.
 
Global Banking2nd Edition
Ingo Walter and Roy C. Smith
Oxford University Press, 2003
 
The coming years will present great challenges to most of the worlds large financial service organizations. The post-EMU internal European market of the early twenty-first century will require larger, more competitive enterprises able to reap significant economies of scale and economies of scope particularly in the areas of financial services as well as transportation, information technology, telecommunications, food products, consumer electronics, and pharmaceuticals.Much restructuring in Europe has already occurred in the 1990s, but what has occurred is a small proportion of all the restructuring that European industry will require in order to adjust to its new market-oriented, more competitive economic environment.With the institutional asset-management industry alone expected to be one of the largest and most dynamic growth segments of the worlds financial services section and with cross-border volume likely to increase dramatically, global financial institutions will have to rethink their basic business strategies. Their business environment mandates them to reformulate their own global competitive strategies, and attempt to reposition themselves to maximize their comparative advantage and to minimize their weaknesses. Because the magnitude of internal change is so great, strategic repositioning can be very difficult to execute. The key to succeeding in the new world financial order is adaptability.
 
This book is aimed at making clear the process of strategic determination in this period of enormous change, with its inescapable requirement for rethinking how individual businesses fit into the totality of global financerendering that process more understandable to both students and to practitioners.
 
Global Banking, Second Edition, attempts to wade into the chaos and confusion of todays global banking and capital market environment and strip out the central parts of it, so that each can be examined separately. The purpose is to gain a better understanding of the evolution of international banking and finance, the services represented in todays market, the competitive process involved, and the impact these have on the prominent public policy issues of the day.
 
Roy C. Smith and Ingo Walters main emphasis is on the issues of formulation, implementation, and evaluation of competitive strategiesthat success because they are ultimately shown to be competitiveof banks and capital market institutions.