Risk Of Commercial Banks Research Articles

Capital market opening and commercial bank risk: Evidence from “Shanghai–Hong Kong Stock Connect”

Based on the implementation background of the “Shanghai–Hong Kong Stock Connect” policy, this paper explores the impact of capital market opening on the commercial banks risk. The results show that the capital market opening has a positive impact on the commercial banks risk. Financial information quality and external information environment are important transmission mechanisms for the capital market opening to affect the commercial bank risk. The impact of capital market opening on the commercial bank risk is heterogeneous, and it has a stronger effect on the risk reduction of commercial banks with larger asset size and capital flow ratio. This study objectively presents the effect of the implementation of the “Shanghai–Hong Kong Stock Connect” policy, and provides empirical evidence for commercial banks to avoid the capital market risks they may face.

ASSESSMENT OF CREDIT RISK OF A COMMERCIAL BANK

This article presents a method for assessing the risks of commercial banks, mainly analyzing the credit risk, interest rate risk and capital risk faced by commercial banks. A model for assessing the credit risk of commercial banks in Uzbekistan is also reviewed.

Stabilizing leverage, financial technology innovation, and commercial bank risks: Evidence from China

With the rapid development of financial technology (FinTech), balancing FinTech innovation with capital risk management is an emerging issue for banks and regulators. To address this issue, we investigate FinTech's impact on the leverage risks of commercial banks. First, we formulate a theoretical model about the optimal leverage ratio determination for commercial banks within the context of FinTech development. We then conduct an empirical study using Chinese banking microdata from 2005 to 2020. Furthermore, we perform robustness tests by varying FinTech indexes. Our empirical results reveal that (1) an optimal leverage ratio exists that minimizes the risks of commercial banks. Furthermore, (2) FinTech helps banks balance their asset allocation structure, playing a countercyclical role in risk reduction. Finally, (3) FinTech can improve profitability and decrease leverage risks of large, medium-sized, and listed banks. These findings can help banks enhance their FinTech innovation capabilities and regulators prevent governance risks.

Study on liquidity risk of commercial banks

China’s banking system, a product of its planned economy, is a means for China to implement its economic and financial development and consolidate its role in the global economy. Recently, this system has been decentralised by adapting specific regulations to international standards. Against this backdrop, the development of inter-bank activities has played a vital role in the rapid expansion of Chinese banking sector’s assets. This study, uses data from 34 listed commercial banks between 2010 and 2018, to analyse the effect of interbank activities on commercial banks’ liquidity risk using a panel data model. This determines whether the effects are the same for different commercial banks. The study concludes that the expansion of interbank activities has increased commercial banks' liquidity risk, and that this effect is more significant in joint-stock banks than in urban commercial banks. Therefore, commercial banks should sensibly position their interbank development model, conduct their interbank business prudently and rationally, and continuously strengthen their risk control measures. The supervisory authorities must continue to strengthen supervision of interbank activities and prevent funds from being de-realised.

Interest rate risk of Chinese commercial banks based on the GARCH-EVT model

Interest rate market risk faced by China’s commercial banks is increasing after the announcement that the interest rate marketisation is completed. This paper examines the Value-at-Risk, and statistical properties in the daily price return of Shanghai banks’ overnight offered rate. The study applies two-stage approaches, combining GARCH-type models with extreme value theory. Firstly, the Markov regime switching model is used to test the regime states of the series. Secondly, the performance of different VaR models are examined. Results show that the extreme value approach estimates better at the 99% confidence level. The EGARCH-GED model is the most suitable of the employed GARCH-type models. The back-testing results support the idea that the approach used in this study is appropriate for improving commercial banks’ daily risk management. This paper applies the GARCH-EVT method for interest rate measurement after China’s interest rate marketisation and added regime analysis of interest rate. Suggested policy implications will help formulate policies that guide the activities of commercial banks in China.

The Effects of COVID-19 on Regulatory and Banking Risk Management Frameworks

As the impact of COVID-19 on people's daily lives is decreasing, its contribution to risk tol-erance in financial markets, especially banking risk management, will remain and continue to live for a long period of time. Due to the difficult economic climate, banks in particular have higher default rates, which puts the stability of the banking system at risk. The primary fo-cus of this study is on the risk management of banking systems following the outbreak of COVID-19 and identifying Basel III's implications on the function of banking crisis preven-tion. Examining both the interior and exterior banking risk supervision in European and the U.S., it can be seen why the bank insolvency incidents have not affected the global financial systems as the 2008-2009 financial crisis did. This paper demonstrates the different risks of commercial banks and summarizes the problems in risk management of commercial banks through the bankruptcy cases of Silicon Valley Bank and Credit Suisse Bank.

Credit risk of Vietnamese commercial banks: does capital structure matter?

Credit risk of Vietnamese commercial banks: does capital structure matter?

The Role of Financial Analysis in Reducing Risks When Making Credit Decisions

The aim of the research is to study the role of financial analysis in reducing and reducing credit risks in commercial banks. The problem of the study was that financial analysis is considered the most helpful means for management and other beneficiaries in making rational decisions in order to reduce credit risks, although many banks have Do not pay much attention to the effective role of financial analysis in reducing credit risks. The aim of the research is to identify the ability of financial analysis of its types to reduce bank credit risks, and to identify the extent to which banks rely on financial analysis as a tool for credit rationalization. The research also dealt with showing the role that the information available using financial analysis tools plays in the process of making rational decisions. Reducing bank credit risks. The study reached several results, including: the bank conducting a financial analysis before granting credit, relying on financial ratios in analyzing credit data that is the least risky, relying on a model for classifying credit and providing information that in turn reduces credit risks for commercial banks. The study also recommended A number of recommendations, including: attention to analyzing customer data before granting credit, and attention to developing models for classifying bank credits.

Research on Factors Affecting Credit Risk of Joint Stock Commercial Banks on Vietnam Stock Market

Design/methodology/approach: The article aims at identifying factors affecting credit risk of commercial banks in Vietnam. The study uses data collected from financial statements of 15 typical joint stock commercial banks out of a total of 27 joint stock commercial banks listed on the Vietnam stock exchange from 2012 to 2022 with panel data of 15 joint stock commercial banks for the period 2012 - 2022. The banks in the research data are the those with the largest total assets in the banking system. After collecting and processing data, research sample includes 165 observations and the study uses E-view software in quantitative analysis to build a regression model to determine the relationship and level of influence of Internal factors to credit risk of listed joint stock commercial banks.
 
 Findings: Research results indicate that factors affecting credit risk of listed joint stock commercial banks include: Ratio of equity to total assets, capital structure of the bank, and operational performance of the banks.
 
 Research, Practical & Social impications: These results confirm the importance of taking into account micro finance factors when making financing. Understanding the impact of these factors and relationships contributes to decision and risk management.
 
 Originality/value: In order to limit credit risk it is necessary to focus on: Ensuring reasonable equity; Stricter control over loan capital; Optimal use of resources.

Influence of Credit Risk Management on Financial Performance of Commercial Banks in Kenya

The management of credit risk in commercial banks determines the banks' financial performance, which predominantly influences the quality of the loan portfolio and the nature of credit administration programs as a whole. By ensuring that credit risk is effectively managed, the primary objective of credit risk management is to generate a high-quality, stable, large, and growing flow of net interest income for banks. This objective is achieved by ensuring that banks can meet the needs of their customers. This study determined the effect of credit risk management on the financial performance of Kenyan commercial banks. The investigation was founded on the portfolio theory. The paradigm of Positivism served as the philosophical foundation for the investigation. The study incorporated both explanatory and longitudinal research designs into its methodology. The study's target population consisted of 32 Commercial Banks in Kenya. The study utilized panel data consisting of time series and cross-sectional data spanning a decade from 2010 to 2019. Using Eviews, descriptive and inferential statistics were used to analyze the collected data, which was then presented in tables and figures. The study found out that Credit risk management had an insignificant negative relationship with Return on Equity (ROE) (F=87.02884, p<0.05) and Return on Assets (ROA) (F=118.1208, p<0.05). Arising from the study findings, it is observed that credit risk management has a negative effect on financial performance measure either in ROA or ROE, it is recommended that commercial banks should keep this parameter as minimum as possible so as not involve in loss making undertakings.

Tác động của hiệu quả sử dụng vốn trí tuệ đến rủi ro tại các ngân hàng thương mại Việt Nam

This paper aims to analyze the impact of intellectual capital efficiency on the risk of Vietnamese commercial banks. Drawing on a research sample of 13 Vietnamese commercial banks during the period 2010- 2021, the authors use the Generalized Method of Moments (GMM) to investigate the impact of variables reflecting the intellectual capital efficiency, including the efficiency of human capital- HCE, capital employed- CEE and capital structure- SCE, to the risk of commercial banks (measured by Z-score and nonperforming loan ratio- NPL). The results show that higher intellectual capital efficiency leads to higher risk (measured by Z- score) and lower credit risk. These findings have important implications on the regulation of the banking system in general as well as on improving the effectiveness of risk management of commercial banks in particular.

Determinan Tingkat Risiko Pembiayaan Bank Umum Syariah Di Indonesia

Financing is an activity of Islamic banks in distributing funds to other parties. Every financing carried out by a bank always contains a risk. The risks faced by Islamic banks are diverse and complex in line with the innovations in the financial and banking products they offer to the public. Although Islamic banks have quite fundamental factors to withstand the occurrence of financing risk, this risk can interfere with the performance of Islamic banking if it is not handled seriously. During the last four years, from the Islamic banking statistics released by the OJK, it is noted that the financing risk that occurs in Islamic Commercial Banks has increased quite significantly. This research is a type of quantitative research. The sampling technique used is purposive sampling. The data processed is secondary data from the annual published reports of Islamic Commercial Banks on the official website of each bank. The data analysis method used in this research is panel data regression analysis with the Eviews 8.0 software in analyzing data. The results obtained from this study indicate that partially UMKM financing, Return In Asset (ROA) has no significant effect on the Financing Risk (NPF) of Islamic Commercial Banks while the Finance to Deposit Ratio (FDR) has a positive and significant effect on the Financing Risk (NPF) of the Bank. Sharia General.

Bank- specific determinants of liquidity risk for commercial banks in Algeria: Panel data analysis during 2005-2020

This study aims to monitor a group of factors that cause liquidity risks and contribute to the occurrence of liquidity problems by testing the determinants of liquidity risk and the explanatory factors of the liquidity problem in Algerian commercial banks. This study seeks to highlight the importance of commercial banks’ liquidity in financing investments to generate profits and the need to maintain appropriate levels to meet liquidity needs. Using panel data for a sample of nine Algerian banks during the period 2005–2020, the study found that the explanatory variables of the liquidity risks that cause liquidity problems in Algerian commercial banks by using the liquid assets to total assets index ratio are: return on assets, return on equity, and capital adequacy ratio, with an explanatory capacity of 59.44%. Analysis of the results of the fixed effect model showed an inverse correlation between the return on assets and liquidity risks. There was a statistically significant positive relationship between the return on equity, capital adequacy ratio, and liquidity risk. There was a negative, but not statistically significant, relationship between bank size, the loan loss provisions to total loans ratio, and liquidity risk. The study recommends that to increase the volume of assets, there should be a corresponding increase in liquid assets as a precaution against liquidity risks in Algerian banks. Also, other determinants are not addressed in the study, which requires further research into the determinants of liquidity risk in Algerian banks.

Fintech and commercial bank risks–The moderating effect of financial regulation

This study examines the relationship between financial technology (fintech) and commercial bank risk, using unbalanced panel data from 114 Chinese urban banks from 2014 to 2021. The findings reveal a complex and dynamic relationship. Overall, fintech has a mitigating effect on bank risk. However, the relationship follows an inverted U-shaped pattern, exacerbating risks in the early stages but reducing them as fintech develops. In particular, financial regulation plays a crucial role in moderating this relationship by counteracting the negative effects during the initial introduction of fintech.

The Impact of Fintech on Credit Risk of Commercial Banks

The financial sector is undergoing new transformations with high integration and deep su-perposition of science, technology, and industry, just as the world as a whole is going through significant changes that have not been witnessed in a century. Commercial banks must adapt to the new normal of financial technology and use new achievements without forgetting to control risks. This paper starts with the concept of fintech and the advancing fintech technologies. Then summarizes the existing methods of fintech quantification. Af-ter that, collect some influencing factors of bank credit risk. Finally link fintech with bank credit risk, and and review the research in this area. At the end of this paper, the limitation of the previous studies and the possible future research directions are proposed.

Credit Risk Determinants in Selected Ethiopian Commercial Banks: A Panel Data Analysis

The study aims to investigate the factors that contribute to credit risk in Ethiopian commercial banks, considering both macroeconomic and bank-specific factors. The research utilized multiple regression models, a quantitative research approach, and explanatory research designs. A purposive sample technique was used to select 10 commercial banks for the study, and secondary data from audited financial reports were analyzed. The findings of the study reveal a significant positive relationship between credit risk and several variables, including bank size, profitability, efficiency, capital adequacy, and inflation. Conversely, there is an inverse relationship between credit risk and both loan growth and currency rates. Surprisingly, the study found that neither GDP nor interest rates have a significant impact on credit risk. Based on these findings, the study provides recommendations for Ethiopian commercial banks. It suggests maintaining adequate levels of capital, avoiding business in sectors influenced by inflationary pressures, carefully evaluating non-interest income, and adjusting lending policies as necessary. Furthermore, the study advises periodically examining the relationships between GDP growth, interest rates, and credit risk. It also emphasizes the importance of adapting credit risk management practices to changing market conditions and staying vigilant toward emerging trends.

THE INFLUENCE OF CAPITAL ADEQUACY, LIQUIDITY, BANK SIZE, AND PROFITABILITY ON CREDIT RISK IN COMMERCIAL BANKS CATEGORY BOOK IV

Banks play a crucial role in the economy of a country, especially in developing nations like Indonesia. Commercial banks classified as BUKU IV are the largest banking group in Indonesia and are known for their strong management. This research aims to analyze the influence of capital adequacy, liquidity, bank size, and profitability on credit risk in Commercial Banks classified as BUKU IV during the period of 2015-2020. The independent variables consist of CAR, LDR, BS, and ROA, while the dependent variable is NPL (Non-Performing Loans). Secondary data collected by the researcher from the annual financial reports of BUKU IV commercial banks are utilized in this study, employing a census sampling technique. The data analysis method applied is panel data regression using E-Views 10 software. The research results indicate that ROA has a negative and significant effect on NPL in BUKU IV Commercial Banks. However, CAR, LDR, and BS do not have a significant impact on NPL in BUKU IV Commercial Banks.

THE IMPACT OF EXTERNAL FACTORS ON THE PROCESSES OF TRANSFORMATION OF BANKS IN THE CONTEXT OF THE DIGITAL ECONOMY

This article considers the issues of forming new standards in banking business based on the factors of liberalization of foreign economic relations, capital and production transnationalization, which affect the processes of transformation of commercial banks in the conditions of the digital economy. The information revolution is creating additional risks for banks through international business and exchange rates. Today, banks are faced with completely new phenomena and tasks such as data processing under the influence of "Big data", the emergence of new participants in the financial market, all this leads to an increase in the risks of commercial banks in the market, and this, in turn, requires the transformation of banks' activities is doing.

Research on the Prevention Strategy of Accounting Risks of Commercial Banks under the New Situation

Research on the Prevention Strategy of Accounting Risks of Commercial Banks under the New Situation

Determinants of liquidity risk: Empirical evidence from Indian commercial banks

Liquidity risk is a significant financial threat that must be handled carefully. Underestimation or mismanagement of liquidity risk may lead to severe financial losses or even bank failures. Therefore, timely and adequately estimating liquidity risk and examining factors that affect liquidity risk are essential. On that account, this paper aims to examine the determinants of liquidity risk for Indian commercial banks from 2013 to 2022. For this purpose, the study has employed a panel data regression model with pooled OLS, fixed effect, and random effect methods and has considered bank-specific and macroeconomic variables. The findings show that liquidity risk is affected by both bank-specific variables and macroeconomic variables. Bank-specific variables, such as bank age, have a negative impact on liquidity risk at the 1 percent significance using pooled OLS, FE, and RE models. In contrast, bank size and bank capitalization positively impacted liquidity risk. However, the operational efficiency of banks was found to have no significant impact on liquidity risk using both the liquid asset to total assets ratio and the loan to deposit ratio. In addition, the results show that macroeconomic variables such as GDP and inflation have a positive impact on liquidity risk. The study’s findings are expected to assist various stakeholders in making appropriate policies, decisions and managing their liquidity risk.