Mathematics of Banking and Finance by Dennis Cox and Michael Cox pdf free download

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Mathematics of Banking and Finance by Dennis Cox and Michael Cox pdf free download

Mathematics of Banking and Finance by Dennis Cox and Michael Cox pdf free download Within business in general and specifically within the banking industry, there are wide ranges of mathematical techniques that are in regular use. These are often embedded into computer systems, which means that the user of the system may be totally unaware of the mathematical calculations and assumptions that are being made. In other cases it would also appear that the banking industry uses mathematical techniques as a form of jargon to create its own mystique, effectively creating a barrier to entry to anyone seeking to join the industry.

Mathematics of Banking and Finance by Dennis Cox and Michael Cox pdf free download

It also serves to effectively baffle clients with science. But in practice things can be much worse than this. Business systems, including specifically those used by bankers or in treasury functions, make regular use of a variety of mathematical techniques without the users having a real appreciation of the objective of the technique, or of its limitations. The consequence of this is that a range of things can go wrong:
1. The user will not understand the output from the system and so will be unable to interpret the information that comes out.
2. The user will not appreciate the limitations in the modelling approach adopted, and will assume that the model works when it would not be valid in the circumstances under consideration.
3. The user may misinterpret the information arising and provide inaccurate information to management.
4. The user may not understand the uncertainties inherent in the model and may pass it to management without highlighting these uncertainties.
5. The user may use an invalid model to try to model something and come up with results that are not meaningful.
6. Management may not understand the information being provided to them by the analysts and may either ignore or misinterpret the information.

Mathematics of Banking and Finance by Dennis Cox and Michael Cox pdf free download

The consequence of this is that models and the mathematics that underpins them are one of the greatest risks that a business can encounter. Within the banking industry the development of the rules for operational risk by the Bank for International Settlements have exacerbated the problem. In the past, operational areas would not be closely involved with mathematics, instead this would have been left to analysts, risk management and planning professionals. However, these new rules put a range of requirements on all levels of staff and have increased the incidence of the use of modelling in operational risk areas.

Mathematics of Banking and Finance by Dennis Cox and Michael Cox pdf free download

Mathematics of Banking and Finance by Dennis Cox and Michael Cox pdf free download

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