The Investigation of Financial Crisis and Risk Management in Global Banking: Evidence From Panel Data Models

• Main Authors: Chun-Ming Chen, 陳俊銘
• Other Authors: Jo-Hui Chen
• Format: Others
• Language: zh-TW
• Published: 2003
• Online Access: http://ndltd.ncl.edu.tw/handle/03540522453218690077

碩士 === 中原大學 === 企業管理研究所 === 91 === The main purpose in this paper is to investigate the financial crisis and the risk management in the global banking industry. In our study process, both of the capital adequacy ratio and non-performing loans ratio stand for the risk management and the financial crisis, respectively. We refer to the data of the top 1000 banks in the world from The Banker in the period of 1993-2002 and use the Fixed effects and Random effects models of the Panel Data to analyze the samples. Our empirical results are as follows: In the aspect of the risk management, the results show that capital asset ratio, returns on assets and cost income ratio are positively related to capital adequacy ratio, suggesting that the more bank capital, the greater expense or the higher return on assets may lead to the rise of the capital adequacy ratio, which is beneficial to reduce the risks of the bank. However, the pre-tax profit, real profits growth and profits on average capital are negatively related to capital adequacy ratio. It ndicates that an increase in pre-tax profit, real profits growth or profits on average capital may improve the bank’s profit, but the increase of the profit depending on risk assets ratio decrease the capital adequacy ratio and endanger the risk control of the bank. Moreover, in the respect of the financial crisis, pre-tax profits, returns on assets and cost income ratio are oppositely related to non-performing loans ratio. The results suggest that the rise of the bank profit can further write-off bad debts. The profit rate on average capital is only positively related to non-performing loans ratio among the banks in the American area. The main reason is that high profit enhanced competition of American banks, but it also make the non-performing loans rise. In the other hand, the capital assets ratio is positively related to non-performing loans of the first capital rank and to the banks in the American area, while it is negatively related to the second capital rank. The results show that the banks with more capital usually operated conscientious in order to make the capital assets ratio decline and effectively lower non-performing loans ratio. Furthermore, the real profit growth rate is negatively related to non-performing loans ratio, the American banks, but it is positively related to that of the third and the fourth capital ranks. The results refer that the banks with smaller scale relaxed credit management to make high profit causing among the rise of non-performing loans ratio even though the profit increases.