The last 30 years have been dramatic for the financial services industry. In the 1990s

and 2000s, boundaries between the traditional industry sectors, such as commercial

banking and investment banking, broke down, and competition became increasingly

global in nature. Many forces contributed to this breakdown in interindustry

and intercountry barriers, including financial innovation, technology, taxation, and

regulation. Then in 2008–09, the financial services industry experienced the worst

financial crisis since the Great Depression. Even into the mid-2010s, the U.S. and

world economies have not recovered from this crisis. It is in this context that this

book is written. Although the traditional nature of each sector’s product activity is

analyzed, a greater emphasis is placed on new areas of activities such as asset securitization,

off-balance-sheet banking, international banking, and on changes occurring

as a result of the financial crisis.

When the first edition of this text was released in 1994, it was the first to analyze

modern financial institutions management from a risk perspective —thus, the

title, Financial Institutions Management: A Modern Perspective. At that time, traditional

texts presented an overview of the industry sector by sector, concentrating on balance

sheet presentations and overlooking management decision making and risk

management. Over the last 20 years other texts have followed this change, such

that a risk management approach to analyzing modern financial institutions is now

well accepted—thus, the title: Financial Institutions Management: A Risk Management

Approach.