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J. Risk Financial Manag. 2018, 11(4), 82; https://doi.org/10.3390/jrfm11040082

Capital Allocation in Decentralized Businesses

Bauer College of Business, University of Houston, TX 77004, USA
Received: 23 October 2018 / Revised: 19 November 2018 / Accepted: 22 November 2018 / Published: 26 November 2018
(This article belongs to the Special Issue Risk Analysis and Portfolio Modelling)
Full-Text   |   PDF [256 KB, uploaded 27 November 2018]

Abstract

This paper described a theory of capital allocation for decentralized businesses, taking into account the costs associated with risk capital. We derive an adjusted present value expression for making investment decisions, that incorporates the time varying profile of risk capital. We discuss the implications for business performance measurement. View Full-Text
Keywords: risk capital; capital allocation; decentralization; performance measurement; RAROC risk capital; capital allocation; decentralization; performance measurement; RAROC
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited (CC BY 4.0).
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Turnbull, S.M. Capital Allocation in Decentralized Businesses. J. Risk Financial Manag. 2018, 11, 82.

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