A Model of Commercial Bank Earning Assets Selection

Abstract

Economists have long been creating models by which to describe optimum behavior for firms to maximize profits. The rigor and inclusiveness of such models have increased steadily in recent years. In the field of commercial banking, however, this has not generally been the case. Concerning the topic of asset management, the typical analyst discusses the decisions to be faced by the bank manager, the reasons for the problems involved, and considerations to include in the solution of such problems. Often, specific rules-of-thumb for the handling of individual asset accounts are advocated.