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Models of Insolvency Risk Analysis in Financial and Banking Institutions

Author

Listed:
  • Constantin ANGHELACHE

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

  • Andreea – Ioana MARINESCU

    (Bucharest University of Economic Studies)

  • Maria MIREA

    (Bucharest University of Economic Studies)

Abstract

The risk of insolvency is one that can cause great problems for the bank’s activity and, in particular, can affect the profitability objective set by the bank’s management. Insolvency is an issue that concerns both the bank, the bank’s clients and the banking market. In this article, the solvency risk is treated in this perspective, focusing on the insolvency analysis, the indicators used and the way of interpretation. When granting loans, the risk of insolvency is equally opposed to the bank or the client. Each of the two parties analyzes the risk of their insolvency but also of their business partner. The main elements of the concept of insolvency risk are presented, an assessment is made of the conditions in which the banking risk arises and then, after identifying it, there are foreseen the elements of study regarding the possible occurrence of the banking risk, but also on the banking strategy elements, for prevent and eliminate the effects of insolvency. Of course, the effects of insolvency are treated more from the point of view of the partner in the business, as this may lead to additional causes for the bank’s evolution strategy.

Suggested Citation

  • Constantin ANGHELACHE & Andreea – Ioana MARINESCU & Maria MIREA, 2017. "Models of Insolvency Risk Analysis in Financial and Banking Institutions," Romanian Statistical Review Supplement, Romanian Statistical Review, vol. 65(11), pages 72-78, November.
    • Handle: RePEc:rsr:supplm:v:65:y:2017:i:11:p:72-78
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    References listed on IDEAS

    as
    1. C. Gouriéroux & J.‐C. Héam & A. Monfort, 2012. "Bilateral exposures and systemic solvency risk," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 45(4), pages 1273-1309, November.
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    3. Jiménez, Gabriel & Lopez, Jose A. & Saurina, Jesús, 2013. "How does competition affect bank risk-taking?," Journal of Financial Stability, Elsevier, vol. 9(2), pages 185-195.
    4. Sokolov, Yuri, 2012. "Modeling risk in a dynamically changing world: from association to causation," MPRA Paper 40096, University Library of Munich, Germany.
    5. Constantin Anghelache & Bodo Gyorgy & Andreea Ioana Marinescu, 2017. "Asymmetric information in case of decision under risk," Romanian Statistical Review Supplement, Romanian Statistical Review, vol. 65(1), pages 22-36, January.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    insolvency; degree of risk; Basel Accord; bank capital; solvency ratios;
    All these keywords.

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • 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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