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Transfer Pricing for Financial Institutions By: John Smullen Normal price: 595 Our price: 565.25 + postage Bargain: save £29.75 ! Product code: 18427 ISBN: 1855733722 160 pages Format: Pb Published by: Woodhead Publishing, 2001 There are no reviews available for this book Description of Transfer Pricing for Financial Institutions The definitive study of this essential part of financial institution management - An authoritative and detailed survey of transfer pricing in the financial sector - A clear exploration by an expert in the field - A full description of the issues involved and the techniques required - A guide to setting prices in financial institutions and integrating transfer prices within the organisational structure - A review of specific transfer prices and risk adjustment performance measures - A study of the strategic perspective Establishing and maintaining effective transfer pricing policies is a key challenge in today's increasingly competitive international financial services sector. There are numerous issues involved, from the requirements of shareholders and risk management to the allocation of capital. There are also many different techniques for establishing efficient transfer pricing systems within an organisation. This illuminating handbook provides a thorough introduction to transfer pricing and its uses within financial organisations, as well as a clear analysis of all the issues involved. Transfer pricing is so complex and variable that there can be no definitive blueprint for success: however, in this book John Smullen has provided a vital contribution to the debate and a much-needed clarification of this important topic. Some of the areas covered: - what transfer pricing is and why it is used - why transfer prices are so appropriate for financial institutions why each organisation needs to approach the introduction of transfer prices differently - how transfer pricing works in commercial organisations - the different types of transfer price - specific analysis of the transfer pricing of funds, capital and derivatives - how to evaluate risk adjusted performance measures - the complexities of estimating marginal costs and revenues - a framework for understanding the motivation of shareholders, managers and regulators - how transfer pricing works as part of management information strategy This lucid and authoritative handbook will help you to: - understand the different techniques used in transfer pricing - establish transfer prices in line with your organisation's strategy and objectives - make sound decisions, minimise risk and achieve better outcomes This is a book for people involved in raising and loaning funds in today's global markets who wants to understand the issues involved in transfer pricing and the techniques required. It will be used by banking, investment, insurance and other financial organisations worldwide. Transfer Pricing for Financial Institutions - Chapter headings PART 1: An introduction to transfer pricing in financial institutions 1: What is transfer pricing? Introduction The definition of transfer pricing Motives for transfer pricing The focus of the book 2: The general theory of transfer pricing Introduction The economist's perception of optimal transfer prices Comments on the simple optimal pricing model Transfer pricing: the accountant's perspective Conclusions 3: Transfer pricing in commercial organisations Introduction Single country transfer pricing systems Multinational transfer pricing practices Comments on transfer pricing experience 4: The uses of transfer pricing in financial organisations Introduction The nature of transfer prices Uses of transfer pricing Different types of transfer price Conclusions PART 2: Setting transfer prices in financial institutions 5: Integrating transfer prices with organisational structure Introduction Financial information: the strategic perspective The interrelationships of units Conclusions 6: Attitudes to risk Introduction The traditional view of risk Market-based attitudes to risk Conclusions PART 3: Specific transfer prices 7: Transfer prices based on operating expenses Introduction The principle of activity-based costing The distinction between transfer pricing and cost allocation Problems in using activity-based costing information as part of a transfer pricing system The uses of cost-based information for transfer pricing Conclusions on the use of costing information Comparing financial and non-financial organisations 8: Transfer pricing the costs of funds: a general perspective Introduction Borrowing and lending, investing and funding Transfer pricing and time Comments on transfer pricing Conclusions 9: The transfer price of funds: some perspectives on wholesale and retail funding Introduction To what extent are wholesale and retail funding equivalent? Price making Effective duration of funds Differences between wholesale and retail customers Discontinuities in wholesale funding Conclusions 10: The transfer pricing of capital Introduction Capital as funding Regulatory capital Conclusions 11: Risk adjusted performance measures: the transfer price of investment portfolios Introduction General issues in relation to RAPMs The measures Problems with the measures Conclusions 12: Risk adjusted performance measures: return on risk adjusted capital and associated measures Introduction RORAC Evaluation of RORAC style measures Is the RORAC approach totally misplaced? Conclusions 13: Risk adjusted performance measures: a critical overview Introduction RAPMs as statistics RAPMs and incrementality Conclusions 14: The transfer pricing of derivatives Introduction The pricing of financial options Business options Conclusions PART 4: The strategic perspective 15: Optimal bank modelling for transfer pricing Introduction Overview of programming model The programming problem applied to a bank situation Interpreting the solution The relationship of the model and transfer prices The impact of constraints The risk relationship of these types of model Conclusions 16: Transfer pricing and management information strategy Introduction The financial and non-financial perspectives Distribution channels Customers Conclusions PART 5: A review of key issues and conclusions 17: Issues and conclusions Introduction No single transfer price Transfer pricing systems are inappropriate for financial institutions Market-based prices and market power Matching Are transfer pricing systems excessively risk averse? Relating transfer pricing to strategy Conclusions Authobiography of John Smullen John Smullen BSc, MA, MSc, MBA was educated at the London School of Economics, Birkbeck College and the London Business School. From 1973 to 1986 he held a number of academic post teaching economics. In 1986 he joined Abbey National plc to establish a linear programming system to analyse the efficiency of their branches and subsequently developed delivery systems for financial management information. When he left to set up his own consultancy, he was senior finance manager responsible for product, customer and organisational unit performance. In 1994 he set up John Smullen Consultancy and Training, which provides financial management information and training consultancy services to the financial services industry. He is also a visiting professor at the Catholic University in Uruguay and visiting lecturer in finance at De Montfort University and the Economics University of Cracow. John is also Senior Academic Associate at the University of Greenwich.