Managing Bank Capital: Capital Allocation and Performance Measurement, 2nd Edition

Preface

The second edition of Managing Bank Capital is intended to be more than just an updated edition with some new material. The aim of the original text was to provide a short, high-level overview of the subject, with most of the detail relegated to appendices which the reader could skip over if he/she desired. The problem with that approach was that readers could not always find real detail on the exact techniques being employed. In conversations with people who have read the book (many thanks to you all), the following comment has been typical: “Chris, I think the book is a good introduction, and I like the way you keep it short, but in chapter XX could you not have spelled out in more detail how exactly …?”.

These conversations, and a number of other factors, motivated me to write this second edition. Firstly, the success of the original book took me totally by surprise—I did not expect that level of interest in what seemed to me a highly esoteric subject. There appears to be much more interest in this subject out there than I realised, and there is still very little in the way of available literature. Secondly—and this surprised me even more—was the level of interest shown by academic institutions offering courses in banking and finance in using the book as an assigned text. It is here where the shortcomings of the original edition become most apparent, as it was never intended as a text for serious academic learning, more just a general introduction. Thirdly, the original ...