Assets Liabilities Models - A Literature Review

Financial crisis with its main component, the banking crisis, had a negative influence on the US and European banks, affecting mostly bank assets with its toxic assets subprime mortgages. The financial crisis has affected all the economies, has had and still has a negative impact on the entire banking system. The main component of the financial crisis was and remains the banking crisis, which continued with the sovereign debt crisis and then returned under a new form of the Cyprus banking crisis. In this paper, we analyzed the changes in the evolution of assets and liabilities of a sample of banks in Romania with a system of financial ratios. For this reason, we used the ratios method in the vertical and horizontal analysis for the period 2006-2015 in order to evaluate the bankers’ decisions. In this research, we analyzed whether performance indicators such as ROA and ROE establish a causal connection with indebtedness indicators, liquidity ratios and solvency ratios. The results showed that in the case of the analyzed banks, there is a dependency relationship between the solvency ratios and the "Total Risk Ratio", "Return on Assets" and "Long Term Funds to Long Term Assets". We highlighted that ROE has an insignificant influence on bank solvency, while other asset and liability indicators do not influence the solvency of the banks studied. Finally, we established that the financial crisis started in 2007 continues today and it is likely that it will begin to manifest itself with this year after the BREXIT.