Models of Insolvency Risk Analysis in Financial and Banking Institutions

Constantin Anghelache, Andreea – Ioana Marinescu and Maria Mirea
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Constantin Anghelache: Bucharest University of Economic Studies / „Artifex” University of Bucharest
Andreea – Ioana Marinescu: Bucharest University of Economic Studies
Maria Mirea: Bucharest University of Economic Studies

Romanian Statistical Review Supplement, 2017, vol. 65, issue 11, 72-78

Abstract: The risk of insolvency is one that can cause great problems for the bank’s activity and, in particular, can affect the profitability objective set by the bank’s management. Insolvency is an issue that concerns both the bank, the bank’s clients and the banking market. In this article, the solvency risk is treated in this perspective, focusing on the insolvency analysis, the indicators used and the way of interpretation. When granting loans, the risk of insolvency is equally opposed to the bank or the client. Each of the two parties analyzes the risk of their insolvency but also of their business partner. The main elements of the concept of insolvency risk are presented, an assessment is made of the conditions in which the banking risk arises and then, after identifying it, there are foreseen the elements of study regarding the possible occurrence of the banking risk, but also on the banking strategy elements, for prevent and eliminate the effects of insolvency. Of course, the effects of insolvency are treated more from the point of view of the partner in the business, as this may lead to additional causes for the bank’s evolution strategy.

Keywords: insolvency; degree of risk; Basel Accord; bank capital; solvency ratios (search for similar items in EconPapers)
JEL-codes: G24 G32 (search for similar items in EconPapers)
Date: 2017
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