Mathias Schmit

What Does MFIs’ Cash Flow Analysis Reveal?

Analyzing cash flow statements helps users of financial statements obtain the relevant information concerning cash movements in and out of the company in a given financial period. They enable financial analysts to understand the financial sustainability of an MFI as a going concern and the way the cash generated by operations is split between dividend distribution and investment activities on one hand and the way the MFI is financed on the other.

Managing Growth and Strategic Risk

The financial crisis has caused multibillion dollar losses and put an end to a long period of strong and steady growth in the investment management industry. More importantly, the crisis has revealed the weaknesses and unsustainability of the growth achieved by several financial institutions.

An empirical approach to residual value risk estimation in automotive leases

Purpose - The purpose of this paper is to examine residual value risk modelling issues with a focus on automotive lease portfolios. Residual value risk is approached through a re-sampling technique that provides the probability density function of losses and VaR measures for credit portfolios. Design/methodology/approach - The methodology is applied to a portfolio of 37,523 operating leases issued between 1989 and 2001 by a major European financial institution. Findings - The results show that residual value losses are low and sometimes non-existent. Moreover, the major part of residual value risk is idiosyncratic and can thus be eliminated through adequate diversification. Additionally, this internal model seems to prove that capital requirements stemming from the Basel Committees proposed new framework are somehow overestimated. Originality/value - This paper advocates determining a more accurate risk weight for residual value risk in order to better reflect this relatively low-risk part of leasing activities.