Theoretical discourse on banks and banking activities in the macroeconomic environment

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2020-07-03 02:18:07

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It is well Known that considerable attention when discussing about banks and banking activity, the focus is on the study of individual financial institutions in their activities not only faced with the problem of insufficient solvency, liquidity and stability, he misjudged the risks in the banking activities and was subsequently declared bankrupt. Often, these organizations are poorly managed, sometimes elicited the facts of financial fraud. The analysis of such situations in retrospect was it possible to establish defects in the control system and adjustments of banking activities.

The Purpose of this discourse does not attempt to explore all types of banking activities or to identify the causes of insolvency or bankruptcy of a certain commercial Bank, primarily because there are no two absolutely identical both internal and external situations and factors influencing the condition of the Bank, which could be used for comparison of the Bank experiencing problems with analyzing current Bank. And even if such analyses, the results are sufficiently uncertain, since it will be just a forecast. Also, speaking of banks and banking, should be aware that all commercial banks operate in a constantly changing economic conditions predict that with a reasonable degree of probability is not only possible, but also the same factors may affect a particular Bank. Internal factors, most important of which are control system of the Bank, its capacity, the ability to make appropriate use of available financial resources and anticipate the consequences of decisions and operations, it is also different for each individual Bank.

Despite the above peculiarities of still a possibility of speaking about banks and banking activity, to establish the characteristics of the banks, bankrupt and liquidated later that will be based primarily on the quantitative ratio analysis of the financial statements of the reporting institutions. The aim is to substantiate the existence of a stable causal relationship between changes in the macroeconomic environment, the condition of banks and the banking system, assessing the impact of the fact that the closure of commercial banks in the state of such environment. Thus to evaluate this effect, we define the annual probability of default of commercial banks  moments method, the result of which will be received discrete series of annual rates. Their comparison with macroeconomic indicators will allow you to set and confirm the existence of such a relationship. This should take into account that the index is purely abstract and is used only for further comparison of state changes of the system of commercial banks with the selected macroeconomic indicators. Speaking specifically about banks and banking activity, it can be argued that this figure illustrates how in a particular calendar year is changed the probability of default of commercial banks, ceteris paribus (both internal and external) only depends on the number of liquidated banks.

It Should be noted that the method of moments is widely used in modeling and the study of the correlations existing defaults of par value of assets in international practice in the evaluation of the probability of default of a portfolio of assets called asset-value approach.

In addition to the method of moments to achieve the same results may also apply the method of maximum likelihood (the maximum likelihood approach).


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ZH: https://www.tostpost.com/zh/business/35996-theoretical-discourse-on-banks-and-banking-activities-in-the-macroecon.html






Alin Trodden - author of the article, editor
"Hi, I'm Alin Trodden. I write texts, read books, and look for impressions. And I'm not bad at telling you about it. I am always happy to participate in interesting projects."

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