New Challenges in the Management of Banking Risks

Abstract

The recent financial and economic crisis has negatively affected the entire economy, especially the banking system, causing a reduction of economy growth, an increase of non-performing loans, a deterioration of financial stability indicators and an increase of inflation. From this experience have been extracted a number of lessons, but also new challenges to the monetary authorities on the management of such situations in the future. The measures taken to reduce the vulnerabilities of the banking system have led to actions at both micro and macroeconomic level, being accompanied by additional costs and new risks. The objective of this article is to emphasize the risks propagated on the banking system in the recent economic and financial crisis, the measures who have been undertaken to reduce them and the evaluation of the level in which one adequate risk management can ensure the positive development of banking activity and the stability of the economy.Into crisis context we could identify a number of destabilizing factors that have affected the performance of banks and created the instability in the entire system. As a reaction to these events, monetary authorities have acted by implementing legislative measures that have targeted the business model implemented in banks, but also the liquidity and capital level. However, to achieve the proposed goals is required the adoption of some actions on banks level, taken individually, which were materialized in the modification of investment policies, mergers, corporate governance, entry into other markets and so on. The analysis shows that the banking system is characterized by a high level of sensitivity, subjected to vulnerabilities caused by the recent international crisis and the increase of risks at his structure. The measures taken to reduce the risks were differentially according to the level of development of each country, but the compliance therewith has reduced the negative effects of the crisis and provided a better risk management to help avoid such situations in the future.