Abstract
Risk is an important factor in the business environment. Decisions have a risk associated with them, and the importance of this risk depends on the environment. Investing in the construction sector is not the same as investing in the banking sector. The possibility of loss requires one to know the maximum risk of sector each type and the implications for this on making the investment. In accordance with this, the objective of this report is to apply the economic and financial risks, which are more important from the business point of view in the construction sector from 2003 to 2013, which allows us to assess whether the risks in the years of growth in this sector are excessive. The data used to carry out this study come from the Bank for the Accounts of Companies Harmonized (BACH) and the methodology will be the formulas for economic and financial risk. The main results of this report are that the risk could advance the future problems of the construction sector while the report also enables an improvement in the risk management in different sectors. Furthermore, this concept ensures that the companies or the sectors could advance measures to optimize the management risk of these areas, especially the economic and financial areas. However, this methodology should be applied in other sectors during the same crisis period in Spain, since this would increase the performance of future studies.
Highlights
In 2007, the annual Spanish Central Bank mentioned [1] that the first signs of slowdown in the real construction sector appeared in the middle of 2006 and gradually consolidated over 2007
In [11] the authors demonstrate that] value at risk (VaR) is one of the most important measures with which to evaluate the maximum loss of a company that could arise from market movements over a specific period
This paper adds to the literature dealing with the determinants of economic and financial risk for companies, especially in the construction sector
Summary
In 2007, the annual Spanish Central Bank mentioned [1] that the first signs of slowdown in the real construction sector appeared in the middle of 2006 and gradually consolidated over 2007. I have analysed the different literature about the relationship between construction and financial risk Following this approach, [3] mentioned that there is a strong dependence between the construction sector and the banking sector, which could affect the profitability and liquidity of companies in a possible economic and financial crisis. A consequence of the 2008 crisis in Spain, especially in the construction sector, was that the composition of the drivers were changed and the financial institutions had to change the structure of the loans and invest in different sectors that had more value added in order to avoid their investment being largely concentrated in the construction sector
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