Financial Modeling Banking through Business Cycles

Ethical Markets Community Development Solutions

Hi Community Development Banking ListServ Inpsirers:

This has been an amazing listserv of practical answers across a range of topics, so I’m sharing our pressing need today.

We are working to create GoodBank™(IO) as a high transparency/ethical banking paradigm, as described in this article http://www.frbsf.org/publications/community/review/vol5_issue2/cahan.pdf

GoodBank is conceived as part bank and part incubator for technologies to improve social financial literacy (knowing what happens with your money out in the world).

There have been 10 business cycles since World War II.  In modeling the GoodBank’s operations, we want to tether our projections to the actual experience of peer banks through business cycles.  In due course, the current contraction (recession) while deeper and wider than most will/has bottom out, expansion will recur, and with it another recession with follow and so on.

How should banks behave in conformity to the season predictability – the inevitability – of business cycle waveforms?  This question is uppermost in our in thinking through pitching GoodBank to potential investors and planning meetings with regulators.

Has anyone used past business cycles as part of their financial modeling/pro forma projections/budgeting?  If so, what variables of business cycling seem most correlated to community bank performance?

We’re looking for experienced peers, smart social MBAs and experienced Excel MySQL/Filemaker Pro developers to help us pro bono with this task.  If you know any, feel free to pass this posting on to them.

Read more about our ethical/high-transparency bank project:
http://www.frbsf.org/publications/community/review/vol5_issue2/cahan.pdf
http://www.goodbank.info/w