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Model of capital risk management in the banking system

Author

Listed:
  • Constantin ANGHELACHE

    (Bucharest University of Economic Studies / „Artifex” University of Bucharest)

  • Marian SFETCU

    („Artifex” University of Bucharest)

  • Doina AVRAM

    (Bucharest University of Economic Studies)

  • Mariana CHILIMENT

    (Bucharest University of Economic Studies)

  • Petre OLTEANU

    (Bucharest University of Economic Studies)

Abstract

Capital represents, in the banking system, an indispensable element of activity. Capital plays an important role in the overall protection of the credit institution against non-diversifying and pure risks. In this sense, capital plays a shock absorber and, for this reason, its size and, above all, its structure are essential in determining the bank’s risk profile. Over the past 30 years, the evolution of bank capital has been dominated by two trends: the decrease of the weight in the total balance sheet and the diversification of the patrimonial elements. The rise in the share of bank capital, in a broad sense, in the total balance sheet of banking companies was manifested during the sixth-eighty centuries of the last century. Under the terms of the period, characterized by the strong stability of banking structures and poor market competition, the fall in capital ratio was a way to increase the rate of financial return, highlighted by the leverage effect. Contrary to the declining interest rate trend, financial profitability rates have remained at relatively satisfactory levels.

Suggested Citation

  • Constantin ANGHELACHE & Marian SFETCU & Doina AVRAM & Mariana CHILIMENT & Petre OLTEANU, 2018. "Model of capital risk management in the banking system," Romanian Statistical Review Supplement, Romanian Statistical Review, vol. 66(1), pages 101-110, January.
    • Handle: RePEc:rsr:supplm:v:66:y:2018:i:1:p:101-110
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    More about this item

    Keywords

    bank capital; Cooke rules; bank solvency; weighting; banking management;
    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

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