Back test and Clearing house: Difference between pages

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Back testing is a form of scenario analysis in which historical data are input into a financial forecasting model. The idea is to identify - according to the model being used for the back testing - what the future outcomes would be if the selected historical scenarios were to recur in the future.
(CH).
 
''Funds transfer''. 
 
A formal or informal association of financial or other institutions that facilitates the exchange of items drawn on participants. 
 
This exists via a central location or central processing mechanism through which financial institutions agree to exchange payment instructions or other financial obligations (for example securities).  
 
The institutions settle for items exchanged at a designated time based on the rules and procedures of the clearing house.
 
 
In some cases, the clearing house may assume significant counterparty, financial or risk management responsibilities for the clearing system.


Another use of back testing is to test the validity and accuracy of the forecasting model itself, in cases where actual historical data is available in relation to the output of the model. In this form of back testing historical data are input into the forecasting model, and the outputs from the model being back tested are compared with the related actual data for the variable being forecast by the model.  Any differences identified may be the result of errors or limitations in the forecasting model.


== See also ==
== See also ==
* [[Scenario analysis]]
* [[Central counterparty]]
* [[Stress test]]
* [[Clearing House Interbank Payment System]]
* [[Clearing system]]
* [[LME Clear]]
* [[Central counterparty]]
 
[[Category:Cash_management]]

Revision as of 16:01, 29 October 2016

(CH).

Funds transfer.

A formal or informal association of financial or other institutions that facilitates the exchange of items drawn on participants.

This exists via a central location or central processing mechanism through which financial institutions agree to exchange payment instructions or other financial obligations (for example securities).

The institutions settle for items exchanged at a designated time based on the rules and procedures of the clearing house.


In some cases, the clearing house may assume significant counterparty, financial or risk management responsibilities for the clearing system.


See also

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