Risks and Banking Performance Connection, Risk Management Drivers on the Romanian Banking Sector

• Main Authors: Violeta Elena Dragoi, Lucretia Mariana Constantinescu, Larisa Elena Preda
• Format: Article
• Language: English
• Published: Dunarea de Jos University of Galati 2019-07-01
• Series: Risk in Contemporary Economy
• Online Access: http://www.rce.feaa.ugal.ro/images/stories/RCE2019/Dragoi_Constantinescu_Preda.pdf

Banking activities occupy a first place in the gross domestic product of each country, by the level of performance achieved through the intermediation activities of the movement of capital and services related to the circulation of monetary assets and the risk strategy. The financial market is extremely fragile due to the influence of a large number of subjective and objective factors. The main purpose of banking activities being to maximize the profit, these activities generate several types of risks, sometimes quite high. To eliminate bank risks, it was necessary to align banks with the provisions of the new Third Basel Accord, which is the key factor for improving banks’ financial performance. In 2018, the Romanian banking system consisted of 35 credit institutions, of which seven are branches of foreign banks. All the macroeconomic factors of the Romanian economy - integration, globalization and transactions - provide important chances for the development of the economic and financial performances, the achievement of remarkable profits but also the significant risks. For effective risk management, these must be identified and evaluated, monitored and used tools, techniques, and specific methods of sizing and/or avoiding their negative influence on banking activity.