ECONOMICS

Detailed explanation-1: -FTP measures the independent contributions of loans versus deposits by comparing each to an independent wholesale cost of funds. We typically use an FHLB borrowing rate curve for the district in which an institution is located as the best available wholesale rate curve.

Detailed explanation-2: -Fund transfer pricing (FTP) is a process used in banking to measure the performance of different business units of a bank. Like other top business schools, INSEAD carries out a great deal of teaching and research in all aspects of banking and finance.

Detailed explanation-3: -When you define balance segments as a percentage of the balance, the calculation is very straightforward: the base funds transfer pricing rate is calculated as the sum of all of the balance percentages for each segment multiplied by the funds transfer pricing rate for that segment.

Detailed explanation-4: -Matched-term transfer pricing. Also called matched maturity, this is the most widely accepted approach to transfer pricing. In a matched-term approach, you transfer price at the individual instrument/record level based on its characteristics, such as origination date, term, options, and expected cash flows.