IDEAS home Printed from https://ideas.repec.org/a/ora/journl/v1y2020i2p64-73.html
   My bibliography  Save this article

An Inquiry On Top Banks By Tier 1 Ranking From Central And Eastern Europe

Author

Listed:
  • CUREA-PITORAC Ruxandra Ioana

    (Department of Economics and Economic Modelling, Faculty of Economics and Business Administration, West University of Timisoara, Timisoara, Romania)

Abstract

Tier 1 capital ranking represents an important instrument that measures a bank’s financial strength and efficiency and The Banker Database, a service provided by The Financial Times it is an important source of data and analysis for the banking sector. Under these circumstances, the objective of the article is to examine the financial and non-financial indicators that might have an impact on the Tier 1 capital ranking banks from Central and Eastern Europe. The research starts with a brief theoretical review of the indicators that influence the financial performance of the banks, the profitability, efficiency and the capital structure. The empirical research was conducted on the first 200 banks from Tier 1 capital ranking and the data was collected from The Banker Database, in the period 2015 - 2018. The banks included in analysis were from 23 countries with a total of 800 observations. The empirical research consists in a qualitative and a quantitative analysis of the banks, with focus on their structure, characteristics and their financial indicators. Using a panel data econometric model, the study highlighted the correlations between the financial and non-financial indicators and the rank of the banks. The researched results revealed that the highest number of the top banks were from Russia (57 banks), Poland (17 banks), Bulgaria (12 banks) and Romania (12 banks). The econometric analysis highlighted that the dependent variable had a positive correlation with Return on Asset (ROA), Total Liabilities to Total Assets (LTA), Loans to Assets Ratio (LTA) and Risk-Weighted Assets Density (RWA). A negative correlation was found with the number of employees and Return on Equity (ROE). The results obtained are in correlation with the recent studies in the field, a bank with smaller liabilities and higher revenues is more efficient and has a higher position in the Tier 1 capital ranking.

Suggested Citation

  • CUREA-PITORAC Ruxandra Ioana, 2020. "An Inquiry On Top Banks By Tier 1 Ranking From Central And Eastern Europe," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(2), pages 64-73, December.
  • Handle: RePEc:ora:journl:v:1:y:2020:i:2:p:64-73
    as

    Download full text from publisher

    File URL: http://anale.steconomiceuoradea.ro/volume/2020/n2/005.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Camelia-Daniela Hategan & Ruxandra-Ioana Curea-Pitorac, 2017. "Testing the Correlations between Corporate Giving, Performance and Company Value," Sustainability, MDPI, Open Access Journal, vol. 9(7), pages 1-20, July.
    2. Harald Hau & Sam Langfield & David Marques-Ibanez, 2013. "Bank ratings: what determines their quality? [Bank risk during the financial crisis: do business models matter?]," Economic Policy, CEPR;CES;MSH, vol. 28(74), pages 289-333.
    3. Renata Karkowska, 2019. "Business Model as a Concept of Sustainability in the Banking Sector," Sustainability, MDPI, Open Access Journal, vol. 12(1), pages 1-12, December.
    4. Nakamura, Leonard I. & Roszbach, Kasper, 2018. "Credit ratings, private information, and bank monitoring ability," Journal of Financial Intermediation, Elsevier, vol. 36(C), pages 58-73.
    5. Justyna Fijałkowska & Beata Zyznarska-Dworczak & Przemysław Garsztka, 2018. "Corporate Social-Environmental Performance versus Financial Performance of Banks in Central and Eastern European Countries," Sustainability, MDPI, Open Access Journal, vol. 10(3), pages 1-22, March.
    6. Douglas W. Diamond & Philip H. Dybvig, 2000. "Bank runs, deposit insurance, and liquidity," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 24(Win), pages 14-23.
    7. Alan D. Morrison & Lucy White, 2005. "Crises and Capital Requirements in Banking," American Economic Review, American Economic Association, vol. 95(5), pages 1548-1572, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Allen, Franklin & Carletti, Elena & Marquez, Robert, 2015. "Deposits and bank capital structure," Journal of Financial Economics, Elsevier, vol. 118(3), pages 601-619.
    2. Jeon, Doh-Shin & Lovo, Stefano, 2013. "Credit rating industry: A helicopter tour of stylized facts and recent theories," International Journal of Industrial Organization, Elsevier, vol. 31(5), pages 643-651.
    3. Freixas, Xavier & Loranth, Gyongyi & Morrison, Alan D., 2007. "Regulating financial conglomerates," Journal of Financial Intermediation, Elsevier, vol. 16(4), pages 479-514, October.
    4. García-Palacios, Jaime H. & Hasman, Augusto & Samartín, Margarita, 2014. "Banking crises and government intervention," Journal of Financial Stability, Elsevier, vol. 15(C), pages 32-42.
    5. Fabio Castiglionesi & Fabio Feriozzi & Gyöngyi Lóránth & Loriana Pelizzon, 2014. "Liquidity Coinsurance and Bank Capital," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 46(2-3), pages 409-443, March.
    6. Morrison, Alan D. & White, Lucy, 2013. "Reputational contagion and optimal regulatory forbearance," Journal of Financial Economics, Elsevier, vol. 110(3), pages 642-658.
    7. Tchana Tchana, Fulbert, 2014. "The empirics of banking regulation," Emerging Markets Review, Elsevier, vol. 19(C), pages 49-76.
    8. Morrison, Alan D. & White, Lucy, 2011. "Deposit insurance and subsidized recapitalizations," Journal of Banking & Finance, Elsevier, vol. 35(12), pages 3400-3416.
    9. Pino, Gabriel & Herrera, Rodrigo & Rodríguez, Alejandro, 2019. "Geographical spillovers on the relation between risk-taking and market power in the US banking sector," The North American Journal of Economics and Finance, Elsevier, vol. 47(C), pages 351-364.
    10. Tianxi, Wang, 2009. "Risk, Leverage, and Regulation of Financial Intermediaries," MPRA Paper 18212, University Library of Munich, Germany.
    11. Van den Heuvel, Skander J., 2008. "The welfare cost of bank capital requirements," Journal of Monetary Economics, Elsevier, vol. 55(2), pages 298-320, March.
    12. Martín-Oliver, Alfredo & Ruano, Sonia & Salas-Fumás, Vicente, 2013. "Why high productivity growth of banks preceded the financial crisis," Journal of Financial Intermediation, Elsevier, vol. 22(4), pages 688-712.
    13. David VanHoose, 2006. "Bank Behavior Under Capital Regulation: What Does The Academic Literature Tell Us?," NFI Working Papers 2006-WP-04, Indiana State University, Scott College of Business, Networks Financial Institute.
    14. André F. Silva, 2019. "Strategic Liquidity Mismatch and Financial Sector Stability," Finance and Economics Discussion Series 2019-082, Board of Governors of the Federal Reserve System (U.S.).
    15. Luc Laeven, 2011. "Banking Crises: A Review," Annual Review of Financial Economics, Annual Reviews, vol. 3(1), pages 17-40, December.
    16. Gersbach, Hans & Haller, Hans & Müller, Jürg, 2015. "The macroeconomics of Modigliani–Miller," Journal of Economic Theory, Elsevier, vol. 157(C), pages 1081-1113.
    17. Haufler, Andreas & Maier, Ulf, 2019. "Regulatory competition in capital standards: a ‘race to the top’ result," Journal of Banking & Finance, Elsevier, vol. 106(C), pages 180-194.
    18. Morrison, Alan & White, Lucy, 2013. "Reputational Contagion and Optimal Regulatory Forbearance," CEPR Discussion Papers 9508, C.E.P.R. Discussion Papers.
    19. Maier, Ulf, 2017. "Regulatory Competition In Capital Standards with Selection Effects among Banks," Rationality and Competition Discussion Paper Series 7, CRC TRR 190 Rationality and Competition.
    20. VanHoose, David, 2007. "Theories of bank behavior under capital regulation," Journal of Banking & Finance, Elsevier, vol. 31(12), pages 3680-3697, December.

    More about this item

    Keywords

    Banks; Financial indicators; Tier 1 Rank; Central and Eastern Europe;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ora:journl:v:1:y:2020:i:2:p:64-73. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/feoraro.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catalin ZMOLE The email address of this maintainer does not seem to be valid anymore. Please ask Catalin ZMOLE to update the entry or send us the correct address (email available below). General contact details of provider: https://edirc.repec.org/data/feoraro.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.