Funds transfer pricing in banking: the cashflow and capital congruent market opportunity in the marktzinsmethode
E. IJskes Additional contact information E. IJskes: Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics
Abstract:
This paper aims at describing the Marktzinsmethode as it developed in German literature. Attention will be paid to the reasons for developing a market-based funds transfer pricing system. The opportunity principle will be introduced as a means of assigning interest income. As a result of the use of the opportunity principle three sources of interest income are recognized: interest income from loans, deposits, and maturity mismatch, as will be illustrated with an example.