METHODOLOGY OF BANK FINANCIAL PERFORMANCE ANALYSES UNDER THE IMPACT OF BANKING RISK

Abstract

This article includes the new approach of banking performance, which clarifies the relationship between return on equity (ROE), risk-adjusted return on capital (RAROC) and return on assets (ROA). The theoreticalmethodological approach highlights more recent research in the international literature and identifies how factors influence the development of mentioned three ratios of returns, using the DuPont* Model for corporates. As a result, the methodological framework for analysing the performance of indigenous commercial banks was developed, based on the particularities of the financial statements of the banking system in the Republic of Moldova. The proposed approach combines the traditional and modern models to measure the banking performance and identify the links between the financial ratios. The proposed methods can be applied to analyse the influence of factors on bank performance and formulate objectives and targets for the financial indicators of commercial banks.

Keywords

• bank performance
• financial risk
• dupont model
• factorial systems
• financial ratios
• financial levier