Annals of the University of Oradea: Economic Science (Dec 2016)
THE RELATION BETWEEN PROFITABILITY, CAPITAL REQUIREMENTS AND THE STRUCTURE OF ASSETS-LIABILITIES IN BANKS
Abstract
As a result of the direct connection between the banking system an economic growth and development it is important to have a clear picture regarding the evolution and stability of the banking sector. Economic shocks and economic cycles influence the stability and resilience of the financial sector, the mainly cyclical nature of the bank sector, raises serious problems for the supervisory institutions, which is one of the reasons why Basel III proposes new instruments in order to create additional capital buffer during the boom period. The level of risk has increased over the levels of 2011-2012 period, due to an increase in the market/liquidity risk and the emerging market risk. There is also an increase in the credit risk, especially in the developed markets the determining factors being a decline in stock prices of banks and a rising in the credit spreads (IMF, 2016).
