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Theoretical judgments about banks and banking activities in the macroeconomic environment

It is common knowledge that when discussing issues related to banks and banking, the main attention is paid to the study of individual financial institutions that, in the course of their activities, not only faced the problem of insufficient solvency, liquidity and sustainability, incorrectly assessed risks in banking activities and subsequently were declared bankrupt . Often it turns out that these organizations were poorly managed, sometimes the facts of financial fraud were revealed. Analysis of such situations in retrospect allowed to establish flaws in the system of control and adjustment of banking activities.

The purpose of this reasoning is not to investigate all types of banking activities or to reveal the reasons for the insolvency or bankruptcy of a particular commercial bank, primarily because there are no two absolutely identical internal and external situations and factors affecting the state of the bank that could be used To compare a bank that is experiencing problems with an analyzed current bank. And even in the case of such an analysis, its results will be sufficiently vague, as this will be only a forecast. In addition, when talking about banks and banking, it should be borne in mind that all commercial banks operate under constantly changing economic conditions, which it is not only impossible to predict with sufficient probability, but also the same factors can have different effects on that Or another bank. Internal factors, the most important of which are the bank management system, its potential, the ability to properly use available financial resources and to anticipate the consequences of decisions and operations, are also different for each particular bank.

Despite the above-mentioned features of the operation, there is still a possibility, speaking of banks and banking activities, to establish the signs of banks that are recognized as bankrupt and later liquidated, which will be based, first of all, on quantitative financial analysis of the financial statements of the institutions in question. The goal is to substantiate the existence of a stable causal relationship between changes in the macroeconomic environment, the state of banks and the banking system, and assess the impact of the closure of commercial banks on the state of such a medium. In order to assess this impact, we will determine the annual probability of default of commercial banks by the moment method, as a result of which a discrete series of annual indicators will be obtained. Comparison of these with macroeconomic indicators will establish and confirm the existence of such a relationship. It should be taken into account that this indicator is of an exclusively abstract nature and is used only for further comparison of changes in the state of the system of commercial banks with selected macroeconomic indicators. Speaking specifically about banks and banking, it can be argued that this indicator illustrates how in a certain calendar year the likelihood of a default of operating commercial banks varies with all other conditions being equal (both internal and external) solely depending on the number of liquidated banks.

It should be noted that the method of moments is widely used in modeling and studying the correlation of existing defaults with the nominal value of assets in international practice in assessing the probability of default of the portfolio of assets and is called the asset-value approach.

In addition to the method of moments, the maximum likelihood approach can also be used to achieve similar results.

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