The reforms introduced in the aftermath of the Global Financial Crisis of 2007–2009 have had the desired effect in that banks are better capitalised, banks have higher liquidity buffers, and the share of non-performing loans is low. Macroprudential policies have been implemented, banking sector supervision has been overhauled, and the new resolution framework gives hope that bank failures will not escalate systemic risk.
This book argues, however, that we still need to remain vigilant. The world has not yet recovered from the pandemic, and we are now faced with new challenges, particularly climate, technological, and geopolitical risks affecting international trade, the availability and prices of energy carriers, and the cost of capital. In this context, it asks what measures should be used to assess a commercial bank, whether as a potential shareholder, client, member of the bank’s bodies, or a supervisory institution. It provides a broad overview of bank performance measures used in contemporary investment, management, and supervisory practice in the most important areas of a bank’s activity, as well as metrics that synthetically reflect the bank’s standing.
The book evaluates a commercial bank in the context of the climate crisis and risk, the growing importance of FinTech, cybersecurity, and AI technology, as well as the challenges related to the escalation of geopolitical risk. It also includes an assessment of the standing of global systemically important banks (G-SiBs) and banking sectors in Europe, indicating potential directions for changes to the tools used so far. It will find a broad audience among students, academics, and researchers in finance and banking, as well as policymakers and regulators.
Chapter 4 of this book is freely available as a downloadable Open Access PDF at http://www.taylorfrancis.com under a Creative Commons Attribution-Non Commercial-No Derivatives (CC BY-NC-ND) 4.0 license.
Table of Contents:
Introduction – is financial stability stable? 2 Value and valuation of a bank in turbulent times 3 The quality of the loan portfolio and its concentration – have the crises of the last decade left their mark on European banks? 4 Profitability, efficiency, and lending dynamics in an unstable environment 5 Capital adequacy as an antidote to banks’ losses caused by the escalation of the financial crisis 6 Liquidity – a necessary condition for the survival of banks during a crisis 7 Credit ratings of banks – have the crises of the 2020s improved rating agency bank assessment methodologies? 8 ESG scoring and other measures of banks’ commitment to sustainable development goals 9 Synthetic measures of commercial bank standing 10 FinTech and its impact on bank performance 11 AI in banking – opportunities and threats 12 Instead of final conclusions: geopolitical risk – the most important challenge for banks
About the Author :
Paweł Niedziółka is Associate Professor and Head of the Financial Risk Management Department, Institute of Banking, Collegium of Socio-Economics, Warsaw School of Economics, Poland.
