Asset and Liability Management - The Institutional Approach to ALM by Commercial Banks in Poland: A Special Focus on Risk Management

Abstract

According to the early evidence, privatization and consolidation of banks have a strong favorable impact on the advancement of ALM and risk management methods. This paper examines various approaches to ALM by commercial banks in Poland. It elaborates results of the empirical survey of ALM and risk management techniques applied by banks in Poland. The survey was conducted in Spring 1999. The analysis shows that privatization of banks contributes to the improvement of efficiency and to better risk management. It creates a favorable climate for implementation of more advanced risk management and measurement techniques. The size of the Polish private banks has also a positive effect on diverse methodology and sophistication of risk management. The analysis implies the need for a further consolidation of Polish financial institutions. Therefore, this paper reinforces arguments in support of accelerated privatization and consolidation of the Polish banking system.