AD477 – Sample Questions

Actual Exam Questions

Questions Prepare by Students

Q(1) by BAYRAKTAR, Burcu

Turkish Banking Act 4389 (modified by act no 4491) article 14-2 states: “If the Banking Regulation and Auditing Institution (BRAI), in its sole discreation determines that if the assets of a bank are insufficient or about to become insufficient to cover its its obligations in terms of maturity or the bank does not comply with the liquidity regulations, the BRAI may ask the bank to remedy this failure in accordance with a plan of action approved by itself and may also, for the purpose of strengthening the liquidity, grant an appropriate amount of time to the bank and require the bank to take two important actions. Explain what these two important actions are.

Q(2) by ÖZDEMİR, Fatma

Turkish Banking Law imposes certain limitations on banks related to the loans a bank may give to its customers. How many different types of limitations do you know that exists in the Banking Law for “Loan Management”? Explain each limitation in detail.

Q(3) by ALPMAN, Arda

Given Bank A with the following data, discuss the legality of the bank’s loan practices in each case according to the Banking Law:

1) Shareholders Equity= 200TL

2) Total Assets =2800TL,

3) Total Liabilities = 2600TL

a) Bank A gives a loan of 40 TL to Company C.

b) Bank A gives a loan of 30TL to 55 different companies each.

c) Bank A gives a loan of 40TL to Company B in which the son of the general manager of Bank A holds 30% interest.

Q(4) by BAYMUL, Yasemin and DOĞAN, Nesrin

Discuss the membership regulations of the Banks Association of Turkey and list the aims of this institution as defined in the Turkish Banking Act 4389.


Explain the conditions necessary to become eligible for a general manager and assistant general manager positions in a Turkish bank.

Q(6) by GÜMÜŞ, İnci

According to Turkish Banking Act 4389 Article 14-3, if the Banking Regulating and Auditing Board (BDDK)determines the existance of any of the 4 conditions stated in this article, it can decide to transfer the management and control of such a bank to the Saving Deposits Insurance Fund (TMSF). Expalin these 4 conditions.

Q(7) by GÜNAR, Serpil

The Turkish Banking Law imposes certain restrictions on Banks for granting loans and acquaring share certificates.

a) Banks can not in any manner whatsoever extend credits (loans)to which types of customers?

b) Banks can not in any manner whatsoever purchase the share sertificates of (make equity participation in) which types of companies?

Q(8) by ERDEK, Ercan

The Turkish Saving Deposits Insurance Fund (TMSF) under normal circumstances   raises its funds from 6 major different sources (Article 15). Under extraordinary situations it can also raise additional funds by special fund raising activities allowed by the Law. List the 6 major sources of funds of the TMSF and explain the special fund raising opportunities the TMSF may use under extraordinary circumstances.

Q(9) by HARCANOĞLU, Murat

The management and audit of Demirbank was transferred to the “Savings Deposit Insurance Fund” (TMSF) on December 06, 2000 as per the Banking Law article 14 paragraph 3. The “TMSF” fund, by the authority given under the Banking Law article 14 paragraph 5 ab), became the only shareholder of the Bank by compensating the “Accumulated Deficit/Losses” of the Bank in return for its shares.

Considering the “Camel Risks”, “Risk Management” and “Asset and Liability Management” techniques, answer the following questions:

a) What happened in the financial markets which triggered the problems of “Wednesday Disaster”?

b) Why was this Bank negatively affected? How did this market reaction affect the “Asset and Liability” structure of the Bank? What impact this had on the “Balance Sheet”, “Income Statement” and “Contingent Liabilities and Commitments” of the Bank?

c) Based on the experience lived, prepare a list of “To Do’s and Not To Do’s” to the other Banks in order not to experience a similar problem. In your answer try to concentrate on “Risk Management” and “Asset and Liability Management” concepts.

Q(10) by EKŞİOĞLU, Zerrin

Explain the concept of “Transparency” in the banking system, its benefits on safe and sound banking practices and its potential drawbacks.

Generic Sample Questions

Q(1) Banking business is full of risks. Bank managers should know the banking risks and how to protect their bank against these risks. Explain the banking risks that every ALCO member should be aware of.

Q(2) Prepare a sample “Balance Sheet” and a sample “Statement of Income” for “Bank Sample A.S.” as of 31/12/1998 and for the year then ended (Use 3 digit numbers).

Q(3) If you are appointed as the General Manager of a Bank which has a significant amount of “Non performing Loans” and the Board of Directors of the Bank gave you the task of solving this problem, what actions will you take to prevent the problem loans to grow in the bank and what things will you do in the bank so that the bank management will give proper loans which will not create collection problems in the future?

Q(4) There are different types of plastis cards used as a payment tool in the market. Explain the different types of plastic cards used, how they are used?, why they are used?, what are the differences between these card?

Q(5) List the CAMEL ratios. Explain what each ratio shows to ALCO.

Q(6) During his conference at Bogazici University organised by BU Ekonomi Kulubu on December 7, 1998 the State Minister Mr. Isin Celebi made the following comments:

  • “The Banks in Turkey prefer to make profit by holding a significant “Foreign Currency Open Position.”
  • “The deposit insurance scheme (system) applied in Turkey is not fair.”

Explain the above two comments. What did Isin Celebi mean? How does these systems he mentioned in a) and b) above work?

Q(7) The Basel Committee on Banking Supervision is a Committee of banking supervisory authorities which was established by the Central Bank Governers of the Group of 10 countries in 1975.

The Basle Committee has been working to improve banking supervision at the international level for many years. The Committee has prepared25 Core Principles for effective Bank Supervision.

Explain the “Methods of Ongoing Banking Supervision” which is icluded in these 25 Core Principles.

Q(8) The Basel Committee recommends that banks, in regular financial reporting and other public disclosures provide timely information which facilitates market participants’ assesment of banks.

It has identified 6 broad categories of information, each of which should be addressed in clear terms and appropriate detail to help achieve a satisfactory level of bank transparency.

Explain each 6 categories of information recommended for proper bank transparency.

Q(9) Banks include 4 Financial Statements in their “Annual Report”.

Prepare the Balance Sheet and the Statement of Income of the Bank which you anaylised in your Term-Project paper. Use any round numbers as you wish.

Before preparing these Statements read the following question. First prepare your Balance Sheet. Then using your interest rate assumptions and the Balance Sheet numbers prepare your Income Statement. During answering this question you will prepare the answer to the following question.

Q(10) Prepare a List showing the realasionship between the Balance Sheet numbers and the Income Statement numbers. Show yourassumptions and computations.

Q(11) Explain the following banking conceps:

    1. NII
    2. ALCO
    3. Funding Risk
    4. Embedded Option Risk
    5. Basis Risk
    6. Interest Rate Sensitive Assets
    7. Short Foreign Exchange Position
    8. Interest Rate Sensitivity Gap
    9. Quasi Equity Loan
    10. Securitisation of Assets
    11. ALM
    12. Call Risk
    13. Interest Rate Gap Strategy
    14. Liquidity Mismatch
    15. Yield Curve Risk
    16. Translation Gain/Loss
    17. Transaction Gain/Loss
    18. Banking Llaw Loan restrictions
    19. Capital Adequacy Ratios
    20. ROA

Q(12) Demirbank was taken over by the Savings Deposit Inurance Fund (SDIF) on December 06, 2000 due the Liqudity Problems and Profitability Problems faced by the Bank when TL interbank overnight borrowing rates increased to %1700 and the foreign investors and lendors called their investments back from the Turkisk market which resulted in foreign currecy outflow of some USD 6 billion from Turkey in one week.

Demirbank had an A&L copmosition which quickly reacted to this Market Change and in one week the Bank lost its Liquidity and made significant NII losses.

    1. Prepare the Balance Sheet of Demirbank as of 30 November 2000, before the crises.
    2. Prepare the Balance Sheet of Demirbank as of 31 December 2000, after the crises when it was taken over by the SDIF.
    3. Prepare the Statement of Income of Demirbank for the month of December 2000 (one month only) State your A&L volume and interest rate assumptions. Show your interest income and interest expense calculations for the month.

Q(13) “Electronic Money” is going to be used in future for payment of goods and services. Expain the E-Money system, its key issues and conceps and the benefits to the bank, to the customer and to the economy.

Q(14) Explain the future trends in “Electronic Banking”.

Q(15) Write a recommendations report to the new General Manager of “IXIRBANK” , a new bank to be established to give banking services only through internet media without any branches, explaining to him what he should do and not do to to establish a successfull banking Web-Site, to give good quality of service to its customers and to attract customers of existing banks to use new “IXIRBANK” services.

Q(16) Explain the different kinds of plastic cards used in electronic payment seystem. Explain the key conceps, security issues, differences between each type of card and the future trends in plastic card payment systems.