The Use of a Simulation Model in the Planning and Evaluation of Commercial Bank Operations

"The objective of this study was to develop m simulation model of a commercial bank’s operations. The model will be designed to accomplish the following: 1. develop a yearly forecast of net income for m period of 1 to 4 years with consideration of liquidity requirements, capital adequacy, and operations management; 2. calculate m total forecasted net income over the 4 year horizon period; 3. generate a record of the results by way of a balance sheet, an income statement, and m supporting report of the intermediate accumulated net income figures for each trial. This research effort establishes two hypotheses. First a model which simulates m commercial bank’s operations can be constructed, run, and evaluated against operating management strategies. Second, the derived benefit of such a modeling process will provide comprehensive insight into the relationship of the balance sheet, the income statement, and various operating decision variables.