The Effects of Global Financial Crisis on the Behaviour of European Banks: A Risk and Profitability Analysis Approach

ACRN Journal of Finance and Risk Perspectives, 1(2), 17-42

26 Pages Posted: 26 Apr 2013

Date Written: December 1, 2012

Abstract

The effects of global financial crisis have been severe on banks. Many banks went bankrupt and many are in distress due to their sensitivities, stored in their balance sheets, to financial risks enlarged by the crisis. Some of banks, on the other hand, have felt the effects slightly. Recalling that total risk is sum of two parts of risk namely; volatility and sensitivity and that volatility is not under the discretion of banks, i.e. externally determined, it is assumed that the degree of banks getting affected by the global financial crisis is largely dependent on their sensitivities to risks. Banks’ sensitivities to risks are assumed to be under the control of banks. Thus, in line with their risk appetite, banks can always change the structure of their balance sheet to alter their sensitivities to financial and non-financial risks. In this paper it is targeted to analyze and compare the balance sheet structure banks from 27 European countries in order to find their sensitivities to different financial risks such as credit risk and liquidity risk. It will further be analyzed how banks’ balance sheet structures have been altered after the crisis. To observe the behavioral variations (if there is any) of banks getting affected by financial crisis, the analysis is widened to include different characteristics of banks such as; the country where they are operating, region where they are belong to, scale of their operations, their ownership, their type and etc.

Keywords: Global crisis, banking, balance sheet structure

JEL Classification: G15, G21, G32

Suggested Citation

Eken, Mehmet Hasan and Selimler, Hüseyin and Kale, Süleyman and Ulusoy, Veysel, The Effects of Global Financial Crisis on the Behaviour of European Banks: A Risk and Profitability Analysis Approach (December 1, 2012). ACRN Journal of Finance and Risk Perspectives, 1(2), 17-42, Available at SSRN: https://ssrn.com/abstract=2256735

Mehmet Hasan Eken

TEMAR ( email )

Kosuyolu Mahallesi, Ismailpasa sokak, Kadikoy
Istanbul, 111111
Turkey

Hüseyin Selimler

Ziraat Bank ( email )

Istanbul
Turkey

Süleyman Kale (Contact Author)

Kırklareli University ( email )

Kepirtepe Mevkii
Lüleburgaz
Kırklareli, 39750
Turkey

HOME PAGE: http://personel.klu.edu.tr/suleymankale

Veysel Ulusoy

Yeditepe University ( email )

Faculty of Commerce
Kayisdagi, Istanbul 81120
Turkey

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
172
Abstract Views
1,205
rank
224,253
PlumX Metrics