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Banking management in the prism liquidity – profitability interrelation

Author

Listed:
  • Valentin PAUNA

    (Bucharest University of Economic Studies, Romania)

  • Amelia DIACONU

    (Artifex University, Romania)

  • Svetlana PLATAGEA GOMBOS

    (Bucharest University of Economic Studies, Romania)

  • Raluca Iuliana GEORGESCU

    (Bucharest University of Economic Studies, Romania)

Abstract

Within a banking company, an important task is to estimate and cover the liquidity needs of the bank. In fact, achieving and maintaining this goal requires real art, as a low level of liquidity leads to significant cash reductions and the need to attract additional resources at high cost, resulting in a decrease in bank profits and excessive liquidity. The return on assets decreases, resulting in poor financial performance. Within a banking company, the most important banking activity is the attraction of money on the market in order to grant loans, thus aiming to obtain as much profit as possible. Any banking activity is accompanied by risks. These risks have negative effects on the bank's activities, such as: deterioration in business quality, impairment of the bank's functionality, decrease in profit, loss, entry into insolvency, bankruptcy.

Suggested Citation

  • Valentin PAUNA & Amelia DIACONU & Svetlana PLATAGEA GOMBOS & Raluca Iuliana GEORGESCU, 2022. "Banking management in the prism liquidity – profitability interrelation," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(1(630), S), pages 93-100, Spring.
    • Handle: RePEc:agr:journl:v:1(630):y:2022:i:1(630):p:93-100
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    References listed on IDEAS

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    2. Panayiotis C. Andreou & Dennis Philip & Peter Robejsek, 2016. "Bank Liquidity Creation and Risk-Taking: Does Managerial Ability Matter?," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 43(1-2), pages 226-259, January.
    3. Fiordelisi, Franco & Minnucci, Federica & Previati, Daniele & Ricci, Ornella, 2020. "Bail-in regulation and stock market reaction," Economics Letters, Elsevier, vol. 186(C).
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