Thursday, April 28, 2016

So You Think You Can ... Run a Bank?

You’re probably not alone in thinking you could have done a better job running one of the banks.  

Now you can see if that’s true, thanks to the Banking Simulator, a creative, educational tool designed by PF2 team member Joe Pimbley.  Like a flight simulator for pilots, it will give you a chance to hone your skills in simulated, but realistic, market conditions and risk scenarios.

Bank managers and executives use models for VaR, loss distributions, economic and regulatory capital, to help with decision-making, but of course those cannot capture the human element of a manager’s decision-making process during a downturn or in reaction to a “black swan” event.
Click on the slideshow for detailed instructions
In the Banking Simulator, you'll be playing the part of the bank CEO or CFO; you'll have to make many quarterly decisions and contend with several risks to keep your bank afloat in whatever situations we throw at you... including bank runs. You decide on the level of debt and equity to issue, and the amount of risky assets to acquire. You also decide the strength of your risk management.

You must make quarterly decisions to: 
  • buy and sell risky assets
  • issue deposits
  • issue, redeem, and repurchase debt
  • issue and repurchase equity
  • pay dividends  


The simulator will show you your bank’s net income and stock price at the end of every quarter. You'll be encouraged to monitor and manage your asset-to-debt and reserve ratios, and you'll need to buffer against asset-liability or maturity mismatches.

Can you run a profitable bank, and at the same time maintain your reserve ratio, satisfy regulatory stress tests? 


Take your chances.  Let's see how resilient you can be, under changing market conditions.  Will you survive a run on the bank?

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