In this course Building the Bank, we will dive into understanding the key components of a bank’s balance sheet including assets, liabilities and capital. We will also explain the main alternative sources of bank funding from equity, capital, and preferred stock to convertibles to bond issues, interbank borrowing and many others. We will be going over concepts like Net Interest Margin (NIM), Non-Performing Loans (NPL), and Risk Weighted Assets (RWA) showing how to calculate RWA of a loan and how it can be computed for various types of risk.
We will also go into an overview of risk and bank capital including the major sources of risk faced by financial firms as well as other types of risk which arise in the industry. We will explain the concept of maturity transformation as the fundamental business model of a commercial bank. Other topics covered will explain the concepts of macroprudential and microprudential regulation and the function of the BCBS and the general aims of the Basel rules.