Stability of the Banking Sector: Deriving Stability Indicators and Stress-Testing

Gulaliyev, Mayis; Ashurbayli-Huseynova, Nigar; Gubadova, Aybaniz A.; Mammadova, Gulsum M.; Jafarova, Rumella T.; Ahmedov, Bahruz N.

doi:10.17512/pjms.2019.19.2.15

Cited by 10 publications

(3 citation statements)

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“…The BSI is based on the weighted average of particular ratings of banks whose assets account for at least two-thirds of the total assets in any country. The BSI tends to be used for comparative analyses of the banking sectors of various countries (Gulaliyev, Ashurbayli-Huseynova, Gubadova, Mammadova, and Jafarova, 2019). Many researchers rely on the z-score in their assessments regarding the stability of the banking system (Andrieş and Căpraru, 2011;Mohsin, Haroon, Rizvi, and Syed Azmi, 2021;Uhde and Heimeshoff, 2009).…”

Section: Literature Reviewmentioning

confidence: 99%

The Interrelationship Among Efficiency and Concentration of Banking System and its Stability: Evidence from Poland

Mikita¹

2022

ERSJ

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Purpose: This article aims to assess the impact of the efficiency of the banking sector and its concentration level on the stability of the banking system in Poland. Design/Methodology/Approach: The impact assessment relies on correlation and regression analysis. The stability of the banking sector is expressed in Z-Score indicator. The assessment of banking efficiency is based on the Return on Equity (ROE) after tax and on the bank cost-to-income ratio. The concentration level is shown as the share of the assets of Poland's three largest commercial banks in the total assets of the banking sector. The calculations are based on panel data for the banking sector in Poland, for the period 1996-2017. Findings: The results obtained suggest a positive influence of the return on equity after tax of the banking sector on the stability of Poland's banking sector and no relationship between the stability of the banking sector and the level of its concentration or the bank cost-toincome ratio.Practical Implications: Identification of the factors determining the stability of the banking system may contribute to its increase, and thus reduce the likelihood of banking crises. Ultimately, this will translate into an increase in the stability of the entire financial system as well as an increase in the stability of the entire economy. Originality/Value: The paper contains the author's original research into stability of banking system in Poland. The study will contribute to the development of theories concerning factors of the stability of the banking system.

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Section: Literature Reviewmentioning

confidence: 99%

The Interrelationship Among Efficiency and Concentration of Banking System and its Stability: Evidence from Poland

Mikita¹

2022

ERSJ

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“…The authors of the article "Stability of the Banking Sector: Derailing Stability Indicators and Stress-Testing" have developed an aggregate indicator of banking stability, which is assessed on the basis of such independent sub-indices as capital adequacy ratio (СA), asset quality (AQ), profitability (P) and liquidity (L). Additionally, banking stability was evaluated using vulnerability assessment and stress testing (Mayis G. Gulaliyev et al 2019). In the Financial and Capital Market Commission's regulations Capital Adequacy Ratio (Tier I and Tier II) is defined as the amount of provisions to cover a bank's operating losses.…”

Section: Theoretical Framework Of Bank Capital Managementmentioning

confidence: 99%

Impact analysis of factors influencing bank capital management

Konovalova¹,

Caplinska²

2020

JESI

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Issues of bank capital management have always been topical for each commercial bank and for bank supervisory institutions. After-effects of the financial crises have encouraged strengthening of capital adequacy requirements and therefore supporting the reasonable risk level. Basel Committee on Banking Supervision adopted a range of guidelines, which promote raising of bank stability and safety, stressing the importance of capital as risk coverage. The aim of the research is the determination of factors influencing bank capital adequacy and assessment of financial strength of capital and especially equity in commercial banks. The subject of this research is focusses on commercial banks of Eastern Europe. Methodologically, research methods as comparison, factors analysis, ratio analysis, charts showing statistic information and others have been used by authors. As the result of the investigation, factors influencing bank capital adequacy have been identified. The most important of these factors is credit risk, which is specially analysed in this research. The obtained results allowed the authors to make a range of conclusions, of which some are: in the period of financial crises most of European commercial banks were operating on the verge of capital adequacy, banks did not have sufficient buffer capital, due to substantial losses during the period of crises capital adequacy was maintained only by the inflow of new share capital and subordinated capital. The authors have provided several suggestions concerning the management of bank capital adequacy to commercial banks.

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“…The increased mobility of capital on a global scale and the manifestation and history of financial-economic crises in Turkey, Mexico, Brazil, and Russia, and in the countries of East Asia, have shed light on many destructive factors of a fixed exchange rate in emerging markets (Obstfeld, Ostry & Qureshi, 2019;Hrebennikova et al, 2021;Gulaliyev et al, 2019). Ghosh and Kumar (2022) presented a different view about discrediting the role of fixed exchange rates as an effective tool to fight inflation and ensure economic resilience and growth over external shocks.…”

Section: Introductionmentioning

confidence: 99%

Exchange rate regime in a crisis: The case of Azerbaijan

Samedova

Vitaly

Aliyeva

et al. 2022

JEECAR

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This study aims to substantiate the practicality of establishing a fixed exchange rate (FER) under external shocks to the Azerbaijani economy. Using regression analysis, principal component analysis, and the Granger causality test, we substantiated the inexpediency of a fixed FER for the manat (the national currency) due to: the ineffective fiscal and monetary policy of the state, weak integration into the U.S. economy, distrust of the manat in the population, and the weakness of currency hedging. Artificial retention of a FER will lead to devaluation and chronic economic recession (inflation growth, a decrease in real incomes of the population, a reduction of GDP per capita, and an increase in unemployment). It is substantiated that an increase in public confidence in the national currency should become the basis for the transition to a floating exchange rate (FER) for the manat as it will help to get the actual value of the manat.

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Stability of the Banking Sector: Deriving Stability Indicators and Stress-Testing

Cited by 10 publications

References 0 publications

The Interrelationship Among Efficiency and Concentration of Banking System and its Stability: Evidence from Poland

The Interrelationship Among Efficiency and Concentration of Banking System and its Stability: Evidence from Poland

Impact analysis of factors influencing bank capital management

Exchange rate regime in a crisis: The case of Azerbaijan

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