Financial Darwinism Create Value or Self-Destruct in a World of Risk

by Tilman, Leo M.; Phelps, Edmund S.

• ISBN13: 9780470385463
• ISBN10: 0470385464
• Edition: 1st
• Format: Hardcover
• Copyright: 2008-11-03
• Publisher: Wiley

Summary

In Financial Darwinism, author Leo Tilman lays the groundwork for understanding the new financial order by introducing his evolutionary thesis and then outlines an actionable decision-making framework that enables financial institutions and investors to fully leverage the power of business strategy, corporate finance, investment analysis, and risk management. Financial Darwinism is an invaluable road map to today's financial world and an essential guide to surviving and thriving during these challenging times.

Author Biography

Leo M. Tilman is President of L.M. Tilman & Co., a strategic advisory firm that serves governments, financial institutions, corporations, and institutional investors worldwide. Prior to founding his own company, he held senior positions with BlackRock and Bear Sterns. Tilman teaches finance at University, which is also his graduate alma mater. He is coauthor of Risk Management (Wiley) and editor of Asset/Liability Management of Financial Institutions (Institutional Investor). Tilman is a contributing editor of the Journal of Risk Finance and a frequent speaker at leading business schools and conferences. He serves on the advisory board of the Center on Capitalism and Society at Columbia University and on the board of directors of Atlantic Partnership. Tilman has been honored by the World Economic Forum as a Young Global Leader, joining a select group of executives, public figures, and intellectuals recognized for “their professional accomplishments, commitment to society, and potential to contribute to shaping the future of the world.”

Table of Contents

Foreword	p. ix
Preface	p. xv
Acknowledgments	p. xix
Understanding and Navigating the Financial Revolution	p. 1
Introduction: The Need for Transformational Thinking	p. 1
From George Bailey to the Golden Age	p. 5
Accounting for Profits the Old-Fashioned Way	p. 7
The "Great Moderation" As an Evolutionary Catalyst	p. 11
Economic Performance in the Dynamic New World	p. 14
Pressures on Static Business Models	p. 18
Dynamic Finance Perspective on Financial Crises	p. 21
Pillars of Strategic Decision Making	p. 25
Value Creation Through Dynamism and Business Model Transformations	p. 26
Beyond the Facade: The Importance of Risk-Based Transparency	p. 35
The Old Regime and Its Demise	p. 39
Economic Performance and Viability of Financial Institutions	p. 39
Static Business Models	p. 41
Dominant Forces: The Future that Has Already Happened	p. 46
Pressures on Static Business Models	p. 55
The Dynamic New World	p. 65
Risk-Based Economic Performance	p. 65
Balance Sheet Arbitrage	p. 68
Principal Investments	p. 69
Systematic Risk Exposures	p. 71
Fees and Expenses	p. 74
Capital Structure Optimization	p. 75
Economic Performance Attribution	p. 75
Business Model Transformations	p. 79
Pillars of Strategic Decisions in a Dynamic World	p. 79
Responsive Recalibrations of Business Models	p. 81
Full-Scale Business Model Transformations	p. 86
Making the Strategic Vision a Reality	p. 93
The Road to Financial Darwinism	p. 99
Real-World Business Model Transformations	p. 99
Stakeholder Communication & Equity Valuation in a Dynamic World	p. 109
Economic Value Creation (and Destruction) by Non-Financial Corporations	p. 112
The Infamous "Carry Trade" and the Old Ways of Thinking	p. 115
A Dynamic Finance Perspective on Modern Financial Crises	p. 118
Beyond the Facade: The Need for Risk-Based Transparency	p. 127
Conclusion	p. 129
Epilogue: Financial Darwinism and the Crisis of 2007-2008	p. 133
The Risk-Based Economic Performance Equation	p. 137
A Case Study in Dynamic Finance	p. 141
Notes	p. 157
References	p. 163
About the Author	p. 167
Index	p. 169
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