Using Monte Carlo for the Assessment of a Brokered Bank Deposit Business

Jan Vlachý

doi:10.5817/FAI2013-2-4

Using Monte Carlo for the Assessment of a Brokered Bank Deposit Business

Vol.4,No.2(2013)

Jan Vlachý

https://doi.org/10.5817/FAI2013-2-4

PDF

Abstract

This paper addresses the issue of a cost-benefit analysis when considering the use of third-party distribution channels for saving accounts. Whilst static budgeting methods seem to be generally appropriate for conventional banking projects based on branching or internet, they provide grossly misleading estimates of commissioning expenses, which can lead to completely unrealistic project assessment and poorly designed commission schedules. Using a case study based on actual project experience in the Czech Republic, the author applies a numerical statistical simulation model serving as a potent tool for strategic decision-making as well as business negotiation.

Keywords:
consumer banking; distribution channels; agency commissions; statistical simulation

References

AFIZ (2012). Asociace finančních zprostředkovatelů a finančních poradců České republiky. Available from: http://www.afiz.cz, accessed 10 December 2012.

Brigham, E. F. - Ehrhardt, M. C. (2009). Financial Management: Theory and Practice, South-Western. ISBN 978-1439078099.

Charnes, J. (2007). Financial Modeling with Crystal Ball and Excel, John Wiley. ISBN 978-1118175446.

CNB (2010). Czech National Bank. http://www.cnb.cz, accessed 15 September 2010.

Drury, C. (2004). Management and Cost Accounting, Thomson. ISBN 978-1844805662.

Eisenhardt, K. M. (1989). Agency Theory: An Assessment and Review, Academy of Management Review, 14(1), pp. 57-74. https://doi.org/10.5465/amr.1989.4279003

Helfert, E. A. (2001). Financial Analysis: Tools and Techniques, McGraw-Hill. ISBN 978-0071378345.

Mun, J. C. (2006). Modeling Risk: Applying Monte Carlo Simulation, Real Options Analysis, Forecasting and Optimization Techniques, John Wiley. ISBN 978-0471478850.

Plhoň, T. (2010). Češi mají spořící účty v oblibě i přes pokles úroků, Ekonom, 4 August.
USF (2010). Unie společností finančního zprostředkování a poradenství. http://www.usfcr.cz, accessed 10 December 2012.

Soin, K. and Scheytt, T. (2008). Management Accounting in Financial Services. In: Chapman, C. S. - Hopwood, A. G. - Shields, M. D. (eds.) Handbook of Management Accounting Research, 3, Elsevier, pp. 1385-1395. ISBN 978- 0080879291