683(59,625'(&/$5$7,21
³,KHUHE\GHFODUHWKDW,KDYHUHDGWKLVWKHVLVDQGLQP\RSLQLRQWKLVUHSRUWLVVXIILFLHQWLQ WHUPVRIVFRSHDQGTXDOLW\IRUWKHDZDUGRIWKHGHJUHHRI
%DFKHORURI0HFKDQLFDO(QJLQHHULQJ$XWRPRWLYH+RQRXUV´
6LJQDWXUH 6XSHUYLVRU '50867+$)$+%,102+'7$+,5
'DWH -81(
(1*,1(3(5)250$1&($1$/<6,686,1* *732:(562)7:$5(
.+$,5,/$05,%,108+$0$'7$-8'',1
7KLVUHSRUWLVVXEPLWWHGLQDFFRUGDQFHZLWKUHTXLUHPHQWIRUWKH %DFKHORURI0HFKDQLFDO(QJLQHHULQJ$XWRPRWLYH+RQV
)DFXOW\RI0HFKDQLFDO(QJLQHHULQJ 8QLYHUVLWL7HNQLNDO0DOD\VLD0HODND
-81(
ii
'(&/$5$7,21
³,KHUHE\GHFODUHWKDWWKHZRUNLQWKLVWKHVLVLVP\RZQH[FHSWIRUVXPPDULHVDQG TXRWDWLRQVZKLFKKDYHEHHQGXO\DFNQRZOHGJHG´
6LJQDWXUH ««««««««««««««««««««« $XWKRU .+$,5,/$05,%,108+$0$'7$-8'',1
'DWH -81(
iii
'(',&$7,21 7KLVWKHVLVLVGHGLFDWHGWR P\EHORYHGIDWKHUDQGPRWKHU
iv
$335(&,$7,21
)LUVWO\,DPJUDWHIXOWR$OODKVZWWKHPRVWJUDFLRXVDQGPRVWPHUFLIXOIRU+LV EOHVVLQJJUDFHDQGJXLGDQFHLQRUGHUIRUPHWRFRPSOHWHWKLVµ3URMHN6DUMDQD0XGD¶
,ZRXOGOLNHWRGHGLFDWHWKLVWKHVLVWRP\EHORYHGSDUHQWV0U0XKDPDG7DMXGGLQ %LQ'DXGDQGDOVR0UV1RUKDFKLPDK%LQWL%DKDURPZKRKDYHDOZD\VEHHQWKHUHIRUPH DQGKDYHEHHQKHOSIXODQGVXSSRUWLYH,WLVZLWKP\GHHSHVWJUDWLWXGHDQGZDUPHVWDIIHFWLRQ WKDW,GHGLFDWHWKLVWKHVLVWRP\6XSHUYLVRU'U0XVWKDIDK%LQ0RKG7DKLUZKRKDVEHHQD FRQVWDQWVRXUFHRINQRZOHGJHDQGLQVSLUDWLRQDQGDOVRWR3URI'U5RVOL$EX%DNDUIURP 803$SSUHFLDWLRQGHGLFDWHGWRERWKP\VHPLQDUSDQHO3603URI0DG\D'U1RUHIIHQGL 7DPDOGLQDQG'U)DWLPDK$O=DKUDK0RKG6D¶DW
,ZRXOGDOVROLNHWRGHGLFDWHWKLVWKHVLVWRSRVWJUDGXDWHVWXGHQWV0XKDPPDG6\DKLU %LQ$OLDQG0XKDPPDG0XKDLPLQ%LQ0XKG6\DIL¶HZKRKHOSHGPHZLWKWKHH[SHULPHQW DQGVLPXODWLRQZRUNV/DVWO\WRP\IHOORZIULHQGVDQGP\FRXUVHPDWHVLQ360JURXSXQGHU 'U0XVWKDIDKVXSHUYLVLRQDQG).0PHPEHURIVWDIIV
7KDQN\RX
v
$&.12:/('*(0(17
$OKDPGXOLOODKWKDQNVWR$OODKVZW,KDYHEHUXQP\SURMHFWRI6DUMDQD0XGDIRU FRPSOHWLQJP\VWXG\LQJDW87H0DQGJHWWLQJJDLQLQYDOXDEOHH[SHULHQFHGXULQJWKHSURMHFW KDVEHHQUXQ
6SHFLDOWKDQNVDUHGHGLFDWHGWRP\VXSHUYLVRU'U0XVWKDIDKELQ0RKG7DKLU%HVLGH WKDW¶VWKDQNVEHFDXVHDOZD\VJLYHPHDVXSSRUWJXLGDQFHLQVWUXFWLRQVROYHP\SUREOHPV DQGPDQ\PRUHRQWKLVSURMHFW$OVRWKDQNVWRFRVXSHUYLVRU'U$KPDG.DPDO%LQ0DW <DPLQIRUJLYLQJIXOOIDLWKWRFDUU\RQWKLVSURMHFW%HVLGHVWKDWWKDQNVWR3URI'U5RVOL $EX%DNDUIURP8QLYHUVLWL0DOD\VLD3DKDQJ803IRUKLV DGYLFHDQGJXLGDQFHLQWKLV UHVHDUFK
, DOVR ZRXOG OLNH WR WKDQNIXO IRU ZKROH P\ IDPLO\ HVSHFLDOO\ WR P\ IDWKHU 0U 0XKDPDG 7DMXGGLQ ELQ +DML 'DXG DQG DOVR P\ PRWKHU 0UV 1RUKDFKLPDK ELQWL +DML %DKDURPWKDWJLYHPHWKHVXSSRUWVDQGDGYLFHV7KH\DUHYHU\KHOSLQJPHWRJLYHPRUDO YDOXHGXULQJUXQWKLVSURMHFWSURSHUO\
/DVWO\,GRQRWIRUJHWWRP\IHOORZKRXVHPDWHDQGFODVVPDWHEHFDXVHKHOSIRUZLOOLQJ WRVKDUHLQIRUPDWLRQDQGNQRZOHGJH6SHFLDOWKDQNVDOVRWR8QLYHUVLWL7HNQLNDO0DOD\VLD 0HODND87H0DQGDOVRP\IDFXOW\0HFKDQLFDO(QJLQHHULQJ)DFXOW\).0
vi
$%675$.
vii
$SL.KXVXV%6)&.HSXWXVDQPHQXQMXNNDQEDKDZDSHWUROPHPSXQ\DLNXDVD\DQJOHELK WRUNGDQ%UHN3HQJJXQDDQ%DKDQ$SL.KXVXV%6)&GDULSDGD&1*WHWDSLNHFHNDSDQLVL SDGXEDJL&1*DGDODKWLGDNVHEDQ\DNSHWURO
viii
$%675$&7
ix
&217(17
&+$37(5 &217(17 3$*(
'(&/$5$7,21 LL
'(',&$7,21 LLL
$335(&,$7,21 LY
$&.12:/('*(0(17 Y
$%675$. YL
$%675$&7 YLLL
7$%/(2)&217(176 L[
/,672)7$%/(6 [L
/,672)),*85(6 [LL
/,672)6<0%2/6 [LY
/,672)$%%5(9,$7,21 [YL
/,672)$33(1',&(6 [YLLL
x
&+$37(5, ,1752'8&7,21
2YHUYLHZ
3UREOHP6WDWHPHQW
2EMHFWLYHV
6FRSHVRI6WXG\
3URMHFW6XPPDU\
&+$37(5 &217(17 3$*(
&+$37(5,, /,7(5$785(5(9,(:
,QWURGXFWLRQ
%DFNJURXQGRI5RELQ(<'(QJLQH
*73RZHU6LPXODWLRQ6RIWZDUH
*DPPD7HFKQRORJLHV,QF
3URGXFWLYLW\7RROV
&RPSUHVVHG1DWXUDO*DV&1*
,QWHUQDO&RPEXVWLRQ(QJLQH,&(
(QJLQH3HUIRUPDQFH3DUDPHWHU
(QHUJ\&RQVXPSWLRQLQ0DOD\VLD
&+$37(5,,, 0(7+2'2/2*<
xi
360)ORZ&KDUW
360)ORZ&KDUW
'HYHORSD0RGHOOHG6LPXODWLRQ
6LPXODWLRQ(TXDWLRQ5HODWLRQVKLS
&+$37(5,9 5(68/76$1'$1$/<6,6
3UHOLPLQDU\5HVXOWV
5HVXOWRI6LPXODWLRQ
5HVXOWRI6LPXODWLRQ'DWD96([SHULPHQWDO 'DWD
&+$37(59 &21&/86,21$1'5(&200(1'$7,21
&RQFOXVLRQ
5HFRPPHQGDWLRQ
%,%/,2*5$3+<
$33(1',&(6
xii
/,672)7$%/(6
12 7,7/( 3$*(
&RPEXVWLRQUHODWHGSURSHUWLHVRIJDVROLQHDQG&1* 'HWDLOVSHFLILFDWLRQRI5RELQ(<'HQJLQH *DVROLQHHQJLQHVSHFLILFDWLRQRI5RELQ(<'
(QJLQHSDUDPHWHUVIRULQWDNHV\VWHPGDWD
(QJLQHSDUDPHWHUVIRUH[KDXVWV\VWHPGDWD
3DUDPHWHUVGDWDIRULQWDNHDQGH[KDXVWYDOYHV
6LPXODWLRQUHVXOWRI*DVROLQH
6LPXODWLRQUHVXOWRI&RPSUHVVHG1DWXUDOJDV&1*
([SHULPHQWDOUHVXOWVRI*DVROLQH
([SHULPHQWDOUHVXOWVRI&RPSUHVVHG1DWXUDO*DV&1*
xiii
/,672)),*85(6
12 7,7/( 3$*(
'LDJUDPRI5RELQ(<'HQJLQH
6FKHPDWLFGLDJUDPRI5RELQ(<'HQJLQH
:DWHUEUDNHK\GUDXOLFSXPS
([DPSOHRIIRXUVWURNHF\FOH
'LDJUDPRI*73RZHUVRIWZDUH
6FKHPDWLFRI*73RZHU3URMHFW0DS
([DPSOHRI&1*WDQN
6FKHPDWLFGLDJUDPRIHQJLQHEDVLFFRPSRQHQWV
([DPSOHRISYGLDJUDP
1DWXUDO*DV5HVRXUFHVE\5HJLRQV
1DWXUDO*DV5HVRXUFHVE\7\SHV
xiv
*DVFRQVXPSWLRQE\6HFWRU
)ORZFKDUWIRU360
)ORZFKDUWIRU360
6FKHPDWLFPRGHOIRUJDVROLQHHQJLQHLQ*73RZHU VLPXODWLRQ
6FKHPDWLFGLDJUDPIRURQHF\OLQGHUHQJLQHSURFHVV
(QJLQHVHWXSLQ*73RZHUVRIWZDUH
12 7,7/( 3$*(
%UDNHSRZHUN:SHUIRUPDQFHRIWKHHQJLQH
%UDNHWRUTXH1PSHUIRUPDQFHRIWKHHQJLQH
%UDNHVSHFLILFIXHOFRQVXPSWLRQ%6)&RIWKHHQJLQH
9ROXPHWULFHIILFLHQF\RIWKHHQJLQH
3UHVVXUHHQJLQHZLWKFUDQNDQJOHDWUSP
3UHVVXUHHQJLQHZLWKFUDQNDQJOHDWUSP
3UHVVXUHHQJLQHZLWKFUDQNDQJOHDWUSP
3UHVVXUHHQJLQHZLWKFUDQNDQJOHDWUSP
3UHVVXUHHQJLQHZLWKFUDQNDQJOHDWUSP
3UHVVXUHHQJLQHZLWKFUDQNDQJOHDWUSP
*UDSKRI%UDNH3RZHUN:
*UDSKRI%UDNH7RUTXH1P
xv
3UHVVXUHHQJLQHZLWKFUDQNDQJOHDWUSP
3UHVVXUHHQJLQHZLWKFUDQNDQJOHDWUSP
3UHVVXUHHQJLQHZLWKFUDQNDQJOHDWUSP
3UHVVXUHHQJLQHZLWKFUDQNDQJOHDWUSP
3UHVVXUHHQJLQHZLWKFUDQNDQJOHDWUSP
3UHVVXUHHQJLQHZLWKFUDQNDQJOHDWUSP
6FKHPDWLFGUDZLQJRI5RELQ(<'HQJLQHIRUWKHLQWDNH DQGYDOYHSRVLWLRQ
7KHDFWXDOSRVLWLRQRIVSDUNSOXJIRU5RELQ(<'
HQJLQH
6WDQGDUGVWURNHHQJLQHJHRPHWU\
xvi
/,672)6<0%2/
3HUFHQWDJH
ܷഥ $YHUDJHSLVWRQVSHHG
݉ሶ 6WHDG\VWDWHIORZRIDLULQWRWKHHQJLQH
݉ሶ 5DWHRIIXHOLQWRHQJLQH
݉ሶǡ ,QVWDQWHQRXVPDVVIORZUDWH
߱ሶ௧ ,QVWDQWDQHRXVFUDQNWUDLQDFFHOHUDWLRQ
ܣ 3LVWRQIDFHDUHDRIDOOSLVWRQV
ܫ௧ (QJLQHLQHUWLD
ܶሺݐሻ ,QVWDQWHQRXVEUDNHWRUTXH
ܸௗ௦ 'LVSDOFHPHQWYROXPH
ܹሶ :RUNSHUF\FOH
ܹ %UDNHZRUN
ߩ 'HQVLW\RIDLU
ߩ 'HQVLW\UHIHUHQFHREMHFWSRLQWHG
xvii
ENZ ,QVWDQWDQHRXVEUDNHSRZHU EPHS %UDNHPHDQHIIHFWLYHSUHVVXUH ESZU %UDNHSRZHU
%6)& %UDNHVSHFLILFIXHOFRQVXPSWLRQ EWT %UDNHWRUTXH
Ԩ 8QLWIRUWHPSHUDWXUHGHJUHH&HOVLXV FF FXELFFHQWLPHWUHGLVSODFHPHQW FSWT &UDQN3LQ7RUTXH
IXHOWRW )XHOWRWDO
Ȁଷ 8QLWRIGHQVLW\
NJPRO NLORJUDPPRO 0DVV 0DVVSHUFHQWDJH PP PLOLPHWHU
1 HQJLQHVSHHG
Q 1XPEHURIUHYROXWLRQVSHUF\FOH 1P 1HZWRQPHWUH7RUTXH
VWT 6KDIW7RUTXH 9RO 9ROXPHSHUFHQWDJH
: :RUN
xviii
/,672)$%%5(9,$7,21
%'& %RWWRP'HDG&HQWUH &, &RPSUHVVHG,JQLWLRQ &1* &RPSUHVVHG1DWXUDO*DV &5 &RPSUHVVLRQ5DWLR ', 'LUHFW,QMHFWLRQ
,&( ,QWHUQDO&RPEXVWLRQ(QJLQH N: NLOR:DWW3RZHU
/1* /LTXHILHG1DWXUDO*DV 0%7 0D[LPXP%UDNH7RUTXH 1*9 1DWXUDO*DV9HKLFOH 360 3URMHN6DUMDQD0XGD USP 5HYROXWLRQ3HU0LQXWH VFIG VWDQGDUGFXELFIHHWSHUGD\ 6, 6SDUN,JQLWLRQ
7'& 7RS'HDG&HQWUH
xix
803 8QLYHUVLWL0DOD\VLD3DKDQJ
87H0 8QLYHUVLWL7HNQLNDO0DOD\VLD0HODND :27 :LGH2SHQ7KURWWOH
xx
/,672)$33(1',&(6
12 7,7/( 3$*(
$ *DQWW&KDUW360
% *DQWW&KDUW360
& 'HWDLO'UDZLQJRI5RELQ(<'(QJLQH
21
&+$37(5,
,1752'8&7,21
29(59,(:
22
RSHUDWLRQRIWKHFRQYHQWLRQDOJDVROLQHIXHOOHGDQGWKH&1*HQJLQHV\VWHPDULVHVIURPWKH SK\VLFDODQGFKHPLFDOSURSHUWLHVRIWKHVHWZRIXHOV,WLVZHOONQRZQIDFWWKDWSHWUROHXP IXHOVDUHOLTXLGDWURRPWHPSHUDWXUHDQG&1*UHPDLQVLQDJDVHRXVVWDWHDWPXFKORZHU WHPSHUDWXUHԨ&1*KDVDORZHUGHQVLW\EXWKLJKHURFWDQHQXPEHUWKDQJDVROLQH,W FDQ HDVLO\ RSHUDWH LQ D KLJK FRPSUHVVLRQ UDWLR DQG KLJKHU VHOIVSRQWDQHRXV LJQLWLRQ WHPSHUDWXUHPDNHVLWDVDIHUIXHOLQFDVHRIOHDNDJH/0'DV7DEOHUHSUHVHQWVWKH FRPSDULVRQEHWZHHQWKHSK\VLRFKHPLFDORI&1*DQGWKDWRIWKHJDVROLQH
7DEOH&RPEXVWLRQUHODWHGSURSHUWLHVRIJDVROLQHDQG&1* 6RXUFH08$VODP
3URSHUWLHV *DVROLQH &1*
0RWRURFWDQHQXPEHU 0RODUPDVVNJPRO
&DUERQZHLJKWIUDFWLRQPDVV 6WRLFKLRPHWULFDLUIXHOUDWLR$)V 6WRLFKLRPHWULFPL[WXUHGHQVLW\Ȁଷ
23
Ø 0RGLILFDWLRQ QHHGHG LQ WKH GLVWULEXWLRQUHIXHOOLQJ QHWZRUN LQ WKH YHKLFOH
Ø )XHO FRPSDWLELOLW\ ZLWK WKH YHKLFOH HQJLQH SRZHU HPLVVLRQ HDVH RI XVHDQGGXUDELOLW\RIHQJLQH
$V D JDV &1* UHTXLUHV D GLIIHUHQW DSSURDFK RI IXHO LQGXFWLRQ PHFKDQLVP RI DOO QRUPDOWHPSHUDWXUHVDQGSUHVVXUHV7KLVKDVUHVXOWHGLQDQLQFUHDVHGLQWHUHVWLQWKHXVHRI &1*DVIXHOIRUWKHLQWHUQDOFRPEXVWLRQHQJLQHVDQGKHQFH&1*KDVQRZXVHGWRSRZHU YHKLFOHVRIYDULRXVUDQJHVVWDUWLQJIURPOLJKWGHOLYHU\WUXFNVWRIXOOXUEDQEXVHVDQGRWKHU YDULHWLHVRIDSSOLFDWLRQV.OLPVWUD
352%/(067$7(0(17
5RVOL$EX%DNDUVDLGWKDWQDWXUDOJDVKDVEHHQXVHGZLGHO\DVDQDOWHUQDWLYH IXHOLQLQWHUQDOFRPEXVWLRQHQJLQH1DWXUDOJDVSURGXFHVYHU\ORZSROOXWLRQDQGHPLVVLRQ FRPSDUHGWR JDVROLQH7KHPDLQSUREOHPWKDWKLQGHUVWKHPDVVLPSOHPHQWDWLRQRI&1* IXHOHG YHKLFOH LQ WKH PDUNHW QRZDGD\V LV LWV ORZHU RXWSXW GXH WR ORVVHV LQ YROXPHWULF HIILFLHQF\ORZIODPHVSHHGDQGDEVHQFHRIIXHOHYDSRUDWLRQZKLFKRQO\KDVUDQJHRI JDVROLQHHQJLQHSRZHURXWSXW