Abstract

The analysis of effectiveness of risk capital in the Polish banking sector have become the main aim of the study. In the article, statistical and econometric methods were used, based on a linear regres-sion model of net profit in relation to the value of own funds of the banking sector in Poland in the years of 2002–2016. Next, through the quartile method, there were estimated the relations between effectiveness and a level of risk capital of the largest banks in Poland. Conducted research were aimed to verify the research hypothesis stating that in the Polish banking sector there is a positive cor-relation between net profit and banks’ own funds, which constitute an essential component of bank risk capital.

Highlights

  • Bank risk is a subject of broad interest in scientific research and numerous publications due to the consequences that it causes in the financial system and the economy (Boyd & De Nicoló, 2005; Apostolik, Donohue, & Went, 2009; Bessis, 2015; Altunbas, Manganelli, Marques-Ibanez, 2011; Županović, 2014; Jajuga, Karaś, Kuziak, & Szczepaniak, 2017; Marcinkowska, 2010; Moreno, 2006; Altunbas, Binici, & Gambacorta, 2017; Szustak, 2017)

  • Conducted research were aimed to verify the research hypothesis stating that in the Polish banking sector there is a positive correlation between net profit and banks’ own funds, which constitute an essential component of bank risk capital

  • The empirical research was directed to verification of the research hypothesis stating that in the Polish banking sector there is a positive correlation between net profit and banks’ own funds, which constitute an essential component of bank risk capital

Read more

Summary

Introduction

Bank risk is a subject of broad interest in scientific research and numerous publications due to the consequences that it causes in the financial system and the economy (Boyd & De Nicoló, 2005; Apostolik, Donohue, & Went, 2009; Bessis, 2015; Altunbas, Manganelli, Marques-Ibanez, 2011; Županović, 2014; Jajuga, Karaś, Kuziak, & Szczepaniak, 2017; Marcinkowska, 2010; Moreno, 2006; Altunbas, Binici, & Gambacorta, 2017; Szustak, 2017). Its active management favors the creation of risk capital, which in banks is of particular relevance and has different sources of its origin, application and serves various purposes. Risk capital in a bank can be interpreted in a different way, as it arises both through risk retention and through its transfer. The study focuses on the retention of bank risk and, informed decision-making about taking over consequences of random events in the case of their occurrence. Risk retention in banks does not mean passive waiting for its consequences. Banks accumulate funds in various forms to cover expected risk, for the most part, being the result of external events - prudential regulations of banking supervision and requiring risk exposure, its measurement, and accurate calculations

Objectives
Methods
Results
Conclusion
Full Text
Published version (Free)

Talk to us

Join us for a 30 min session where you can share your feedback and ask us any queries you have

Schedule a call