Risk in Vcb
Beeside credit risk, VCB as other vietnamese banks must to face with the big problem being received so many interest: market risk. MARKET RISK is defined as the risk to bank’s financial condition that could result from adverse movements in market price. There are 3 types of market risk: liquidity risk, interest rate risk, foreign exchange rate. Market risk manegement builds the comprehensive and dynamic framework to measure, monitor and manage liquidity, interest rate, FX rate as well as the commodity price risk of bank that should be closely integrated with bank’s business strategy.
Liquidity risk:
when a bank is withdrawn money from available user, they have to cope with liquidity risk . I means, liquidity refers to the ability of a financial institution to meet its operational and debt obligations without incurring severe losses or defaulting, especially in bank, they are closely related with deposits payment, loans, payments, capital transactions, etc. Liquidity risk causes from working of asset or liabilities. The basic of risk for liability include 2 side:
Banks rarely provides equality between supply and demand of liquidity in all time.
Liquidity and profibility is inverse that higher liquidity assets have, lower profibility they have or capital have higher liquidity, they need higer working capital leading to decresing the profibility.
From 208 to now, state bank of Viet Nam(SBV) must to pay attention and warning about this problem. The bank shoud ensure affordability by building the avalable level of daily funds or reserving their liqudation. To decide this level, different in different bank, they must care many factors such as their reputation, policies or discounted rate, or finacing of bank.
Interest rate risk:
Interest rate risk occurs when there is a substantial change in the interest rate of input and output, the disparity between the level of