Traditional Online Banking Risk Management

Online bank got its birth since the middle of the 90s in the last century, marked by the foundation of SFNB in 1995. This new version of bank soon appears in America, Europe and Asia. Backed by the "information highway" and the tide of network economy, the online bank has once been under the spotlight and attracted the attention from banking industry and academic concerns. The analytical object of the thesis is the traditional risk in the online bank, including the market risk, credit risk and liquidity risk. By means of the traditional theory and demonstration of VAR, this thesis compare the traditional risk characterized by different forms of bank. As the contemporary risk measure method, VAR has been widely used in lot of financial fields. This useful method will further describe the risk on the basis of the traditional theory analysis, and is to be the main point of the demonstration. The demonstration part take the Nasdaq listed online bank "Netbank" as an example in comparison with averaged level of the same scale bank in USA. All the VAR data will be analyzed comparatively; the credit risk analysis will introduce the Monte Carlo model to develop the original VAR approach; the liquidity risk will analyze the VAR through the multi-model scenario approach. One of the writer's goals was to broaden the horizon of research in this field.This thesis is an exploring one, which combines theoretical and VAR approach. After the comparison and analysis several critical conclusions was drawn as follows.