What is a Back-to-Back Commitment? A back-to-back commitment is an allegiance or dedication made by a bank or financial institution to make a second loan on a future date that is contingent upon the terms of the first loan being satisfied. A back-to-back commitment works based on a commitment that a second loan will serve as a piggyback to another l...

What is the Asian Infrastructure Investment Bank? The Asian Infrastructure Investment Bank (AIIB) is a multilateral development bank whose mission is to offer financial support or aid for infrastructural projects in the Indo-Pacific region; Asia. AIIB was established to address the infrastructure deficiency experienced by Asian countries and to also...

What is a Cost of Funds Index?  The cost of fund index, COFI, refers to the interest rate's weighted average that banks compensate on savings accounts held by their clients and their financial creditors. The interest charged by banks are determined by the banks cost of fund index. Back to:BANKING, LENDING, & CREDIT INDUSTRY How Does the Cost of ...

What is the International Organization for Standardization? The International Organization for Standardization (ISO) is an international organization that develops and publishes international business standards. These standards are incorporated by businesses throughout the world. Within the catalog of international standards, there are 97 unique fie...

What is the Bank Secrecy Act? The Bank Secrecy Act (BSA), which was passed in 1970, and is sometimes referred to as the Currency and Foreign Transactions Reporting Act or the Anti-Money Laundering Act (AML), is a statute designed to curb money laundering events. In particular, the BSA requires banks and financial institutions to help state agencies ...

What is a Bank Guarantee? A bank guarantee is a document from a lending institution that acts as a guarantee. What a bank guarantee from a lending institution does is that it ensures that the debtors liabilities are settled. So, in case the debtor fails to meet the loan obligation, the bank will come in to cover it. Generally, a bank guarantee ensur...

What is Splitting Up the Value Chain? Specialization in the world economy can be very finely split. In fact, recent years have seen a trend in international trade, which economists call splitting up the value chain. The value chain describes how a good is produced in stages. As indicated in the beginning of the chapter, producing the iPhone involves...

What is a Performance Evaluation? Performance evaluation is part of the performance management process. It is an evaluation of the activities and performance of the individual employee based upon organizational goals and objectives.  The purpose of the evaluation is to align individual performance with organizational goals and objectives.  How does ...

What is a Multivariate Model? The multivariate model is a widely used statistical measure that consider multiple variables for arriving at feasible results. Financial analysts utilize multivariate models in order to assess several scenarios for predicting investment returns, and figure out what risks are associated with a specific portfolio. And thi...

What is the Benchmark Interest Rate? A benchmark reference rate is an interest rate that determines other interest rates. There are different interest rate benchmarks used for setting other interest rates. They determine the yield, returns or pay-offs attributable to other contracts. Benchmark defense rates are used in financial contracts, mortgage ...