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How does assets-liabilities management affects the profitability of banks?

Author

Listed:
  • Ioan TRENCA

    (Babes-Bolyai University, FSEGA, Cluj-Napoca, Romania)

  • Mihail-Ioan COCIUBA

    (Babes-Bolyai University, FSEGA, Cluj-Napoca, Romania)

Abstract

The economic crisis has affected the stability of the financial institutions (banks) and the instability from the banking sector affected the real economy. Some banks were affected more than others and in this paper we analyze the stability and profitability of banks from the point of the asset-liability management. Assets-liabilities management (ALM) is the management of risk at bank level, the structure of the assets and liabilities of the banks may show which are the differences between the "good banks" and "bad banks". The main goal of this paper is to analyze the asset-liability management in banks for the 2004-2011 period, using a panel of over 30 banks. The analysis is carried using the canonical correlations (Hotelling, 1936), while in the case of the simple correlation we test for a linear dependency between two variables, canonical correlation test the interdependence between two sets of variables (the structure of assets and liabilities.

Suggested Citation

  • Ioan TRENCA & Mihail-Ioan COCIUBA, 2014. "How does assets-liabilities management affects the profitability of banks?," The Journal of Accounting and Management, Danubius University of Galati, issue 3, pages 47-50, December.
    • Handle: RePEc:dug:jaccma:y:2014:i:3:p:47-50
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    References listed on IDEAS

    as
    1. Memmel, Christoph & Schertler, Andrea, 2011. "Banks' management of the net interest margin: Evidence from Germany," Discussion Paper Series 2: Banking and Financial Studies 2011,13, Deutsche Bundesbank.
    2. DeYoung, Robert & Yom, Chiwon, 2008. "On the independence of assets and liabilities: Evidence from U.S. commercial banks, 1990-2005," Journal of Financial Stability, Elsevier, vol. 4(3), pages 275-303, September.
    3. M. I. Kusy & W. T. Ziemba, 1986. "A Bank Asset and Liability Management Model," Operations Research, INFORMS, vol. 34(3), pages 356-376, June.
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