Mohammad Hashem Botshekan - CEO of EN Bank and Faculty member of Allameh Tabataba i University
Mostafa Seraj - Business Intelligence Expert of EN Bank and M.Sc. Finance, Sharif University of Technology

Banks risk management units, only identify and measure risks; however, risk management could be a basis of decision making on capital structure and capital budgeting which leads to value creation maximization for shareholders. In this paper, we review fundamental differences of capital budgeting decisions between banking industry and the other industries and the best practices of capital allocation and capital management in banks and then investigate the application of these best practices in regard to the current circumstances of Iran s banking industry.

Risk management, Capital structure, Capital budgeting, Economic capital and Risk adjusted return on capital (raroc)