Asset Liability Management Info
Asset liability management is a process of managing risks that emerge because of mismatches of liabilities and assets of banks. Bank can have different variants of risks such as interest, credit, liquidity risks and sometimes operation risks. Asset liability management can be described as strategic asset management tool to solve risk problems dealing with interest rates and liquidity. Such risks can be faced by companies providing financial services, banks and corporations. The basic principles of asset liability management appeared at the late 70-ss in the USA. It was the period of a very high interest rate.

Modern asset liability management includes different approaches to solving financial problems due to market risks, interest rate risks, liquidity and credit risks. The meaning of the term "asset liability management" can vary depending on the contexts it is used in. Anyway today asset liability management principles are widely used by financial organizations. So, asset management advisors focus their attention at asset liability risks. Most of serious financial institutions have asset management or asset liability management departments. All the risks mentioned above can become a very big problem for banks, for example, so it is very desirable and sometimes even vitally important to avoid and to prevent such risks. The consequences of a poor asset liability management can be very negative both for financial institutions and their clients. Asset liability management includes such techniques as duration and gap analysis. Another important part of asset and liability management is liquidity risk management and most of specialists in asset management departments of financial institutions are busy with this problem.

Nowadays all the aspects of this kind of asset management is thoroughly studied by the the best economists and financial experts all over the world because billions of bank asset depend upon stable and favorable conditions within banks and financial market.