Funds administration in commercial banks

In the period between the beginning of the 1980s to the 1990sdeveloped and developing countries have gone under a series of reforms inorder to make their financial systems free of restrains. The most important ofthese reforms are freeing interest rates in order to cancel credit limitations,opening banking sector to both foreigners and locals and freeing capitalmovements.Because of the financial freedom, a lot of new products haveappeared in the market and this new situation has brought a lot of risksalongside. Because the crisis at April 1994, November 2000 and February2001 experienced in Turkey have effected the financial sector, this situationmakes the administration of funds in banks even more important.Today, commercial banks satisfy the short term credit need forenterprises and by giving funds acquired from investments and other sourcesso working as a bridge they contribute to the development of the country?seconomic life. Commercial banks can effect income and wealth distribution ineconomy through their policies in giving credits. For example, by thepractices of consumer credits and credit cards, a group of people in societywho do not occupy with trade also benefit from banks credits and effectincome and wealth distribution.In the administration of funds, acquiring foreign sources in a minimumcost, achieving maximum income in letting funds be used, and puttingsources banks have to good use in the best way are altogether the main ideabehind these actions.This idea is related to the policies banks make in pricing. Incommercial banks pricing policies effect profits very much. But in pricingbanks usually do not follow an independent pricing policy because of a lot offactors such as rival banks and wishes of customers.This aim of thesis ?Funds Administration in Commercial Banks? to bedone is because policies banks apply are important in economy.This study has three chapters. In the first chapter, there is ananalytical approach to both the administration of funds in banks and theadministration of funds. In this chapter, interest margins and CAMELapproach, which are important for banking sector, are dwelled upon. Thenother financial rations and analysis used in financial area are discussedbefore the first chapter. Items not considered as balance- sheet which arevery important for the administration of funds in banks are briefly mentioned.Items not considered as balance- sheet such as guarantee letters, forwardsand futures, option and swap operations are also mentioned.It is known that banks face with some risks because of marketconditions and policies they apply. In the third chapter, these risks are brieflymentioned and market risk, interest rate risk, foreign currency risk and creditrisk are explained. Also in this chapter, pricing policies of banks are brieflymentioned.In the last chapter, the situation of Turkish economy after 1980 isdiscussed. The developments in banking sector before and after 1980 areexplained and the basic problems of the sector are examined.The reason why there is a division such as before and after 1980 inbanking sector is after 1980 policies applied in this sector have shown adifference after the financial freedom seen in the world and in Turkey.This thesis study ends with a conclusion chapter in which the subjectsdiscussed in the three chapters are evaluated.