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THE IMPLICATIONS OF THE GLOBAL CRISIS ON THE FINANCIAL PERFORMANCES OF THE ROMANIAN BANKING SYSTEM
Ioan NISTOR,Mirela PINTEA,Maria ULICI
Scientific Annals of the Alexandru Ioan Cuza University of Iasi : Economic Sciences Series , 2010,
Abstract: The increase of financial crisis in 2008 helped to bring the recession in developed countries and the reduction of acceleration in the economies of emerging countries. Moreover, the degree of vulner-ability in emerging countries has increased through their dependence of external financing. Mutual potentiation of negative developments in financial markets and the real economy determinates a vola-tile environment, stressing the difficulties of forecasting the magnitude of the impact on short and medium term of the global crisis on macroeconomic developments in our country. Romanian banking sector is very affected, there are made changes of interest rate of monetary policy, of interest rates charged on loans and deposits, while the banks’ bad debts are increasing.The year 2009 brought with it the decrease in the financial performances of the credit institu-tions especially due to the constitution of provisions for the outstanding loans. The provisions exploded at the beginning of the year, conditions in which banks have recorded losses in January and February and, despite a slight recovery in March, first quarter results ware negative. On the other side the operational profits are still good so it depends on how each bank will be able to deal with the loans with problems in order to obtain a decrease in their provisions.The banking system from Romania should find rapid solutions in order to improve their financial results through to improving the banking indebtedness for the entities depending on credits and in this way it contributes to accelerate the process of businesses development through credits.
THE IMPACT OF THE FINANCIAL AND ECONOMIC GLOBAL CRISIS OVER THE ROMANIAN BANKING SYSTEM  [PDF]
Ciobanu (Sireteanu) Elena
Annals of the University of Oradea : Economic Science , 2011,
Abstract: This paper analyzes the evolution of the Romanian banking system during 2007 - 2010 compared to the same segment of financial market dynamics in the Member States. Also seeks to detect the effects of the global financial and economic crisis on lending activity, the management of liquidity risk and thereby the effect on the profitability of the Romanian banking sector and outline the prospects of further development. The macroeconomic and financial international background has undergone negative changes, especially in the autumn of 2008. Romania's financial system has evolved but strongly marked by the virulent manifestations of global financial and economic crisis. The banking system which is the dominant component in the financial system is well capitalized, has resisted, until now, these pressures, without recording any bankruptcy. As a lending crunch from the increase in provision expenses, against the backdrop of bad loans it seems to be a poor performance of the banking system for the future period, taking into account the negative financial result recorded at the end of 2010. Given the high degree of capitalization, liquidity level indicators, on this, consider that local banks are well placed to support the real economy on long-term lending conditions imposed by prudential regulations in the field. Currently, at the level of the Romanian banking system, we consider it is necessary to continue the measures imposed by the monetary authority to ensure the reduction of uncertainty and reassure market participants in future developments, as trust is the essential factor for the crisis. In this sense, we consider very important the debate, the direct involvement of representatives of the central bank and academic themes reflecting the current state of the Romanian financial system, lessons learned from the crisis and Romania's objectives for the future - providing a sustainable process of nominal and real convergence of the Romanian economy - towards European integration in a not too distant horizon.
Investigating the Determinants of Nonperforming Loans in the Romanian Banking System: An Empirical Study with Reference to the Greek Crisis  [PDF]
Sofoklis D. Vogiazas,Eftychia Nikolaidou
Economics Research International , 2011, DOI: 10.1155/2011/214689
Abstract: This paper aims to investigate the determinants of nonperforming loans in the Romanian banking sector by means of time series modelling. It is motivated by the hypothesis that macroeconomic-cyclical indicators, monetary aggregates, interest rates, financial markets, and bank-specific variables influence the nonperforming loans in the Romanian banking system. Using monthly series that span from December 2001 to November 2010, we cover both the booming period and the recent financial crisis. Given the significant presence of the Greek banks in Romania, the novelty of the paper lies in the introduction of variables that proxy the Greek crisis. Thus, we examine the existence of a potential transmission channel to the Romanian banking system by investigating the impact of the Greek crisis to the Romanian nonperforming loans. Our findings indicate that macroeconomic variables, specifically the construction and investment expenditure, the inflation and the unemployment rate, and the country's external debt to GDP and M2 jointly with Greek crisis-specific variables influence the credit risk of the Romanian banking system. The results have several implications for policymakers, regulators, and managers as the most recent published stress tests on the Romanian banking system are based on end 2008 data. 1. Introduction The study of financial sector stability has become the cornerstone of modern macroeconomic policy. The recent global financial crisis highlighted the importance of appreciating financial institutions’ vulnerabilities in the context of managing credit risk. The key motivation for this paper is to improve our understanding of the credit risk determinants by focusing on the Romanian banking system while casting a vigilant eye on potential contagion effects from neighbouring countries. This is particularly important given that the Romanian financial system is dominated by foreign-owned commercial banks. Among them, the Greek banks’ subsidiaries have a substantial presence as they hold 30.7% of aggregate foreign capital while they account for the second largest market share in the Romanian banking system [1]. Therefore, any attempt of exploring the deterministic factors of the Romanian banks’ credit risk should not be limited solely on endogenous variables of the respective economy. Using time series modelling techniques, this paper empirically investigates the determinants of ex post credit risk as reflected on the loss loan provisions to total loans ratio for the Romanian banking system. Related to a growing body of literature, the purpose of the study
Investigating the Determinants of Nonperforming Loans in the Romanian Banking System: An Empirical Study with Reference to the Greek Crisis  [PDF]
Sofoklis D. Vogiazas,Eftychia Nikolaidou
Economics Research International , 2011, DOI: 10.1155/2011/214689
Abstract: This paper aims to investigate the determinants of nonperforming loans in the Romanian banking sector by means of time series modelling. It is motivated by the hypothesis that macroeconomic-cyclical indicators, monetary aggregates, interest rates, financial markets, and bank-specific variables influence the nonperforming loans in the Romanian banking system. Using monthly series that span from December 2001 to November 2010, we cover both the booming period and the recent financial crisis. Given the significant presence of the Greek banks in Romania, the novelty of the paper lies in the introduction of variables that proxy the Greek crisis. Thus, we examine the existence of a potential transmission channel to the Romanian banking system by investigating the impact of the Greek crisis to the Romanian nonperforming loans. Our findings indicate that macroeconomic variables, specifically the construction and investment expenditure, the inflation and the unemployment rate, and the country's external debt to GDP and M2 jointly with Greek crisis-specific variables influence the credit risk of the Romanian banking system. The results have several implications for policymakers, regulators, and managers as the most recent published stress tests on the Romanian banking system are based on end 2008 data.
LIMITS AND VULNERABILITIES OF BANKING PROFITABILITY INDICATORS DURING THE FINANCIAL CRISIS
TEODORA CRISTINA BARBU,IUSTINA ALINA BOITAN
Challenges of the Knowledge Society , 2012,
Abstract: Bank performance measurement, as an expression of banks’ ability to generate sustainable profits, is a topic of major interest, located in the core of all categories of participants involved in the banking business: banking supervisory authorities, rating agencies, shareholders, investors and analysts of banking activity. Recent developments in bank profitability during the global financial crisis have highlighted a number of limitations of traditional banking performance measurement indicators, in respect of their capacity to provide relevant, credible and genuine information related to credit institutions’ activity. In this article we intend to argue, by investigations at conceptual and quantitative level, the extent to which traditional indicators of bank profitability provide a comprehensive and real insight into the credit institutions’ financial performance. The empirical study applies the stress test methodology, through which is assessed the extent to which Romanian banking system‘s performance, represented by ROE, changes in the context of defining adverse, but plausible scenarios. Hence, it had been simulated ROE’s degree of response for three types of scenarios. We have applied both univariate stress tests (sensitivity analysis) in order to isolate the potential impact of each risk factor on bank profitability, and multivariate stress tests, which allow the simultaneous application of multiple shocks on risk factors. The results show the most important risk factors that adversely affect banking system’s profitability and the concrete value by which profitability is expected to decrease for each scenario analyzed.
THE ROMANIAN BANKING SYSTEM a€“ PAST, ACTUALITY, PERSPECTIVES  [PDF]
DAVID DELIA
Annals of the University of Oradea : Economic Science , 2012,
Abstract: The way crossed by the Romanian banking system until the present time is one governed by profound reforms which have been made in regards to the European Union. The strategies embraced by Romanian banks, in 1990 and until the present time, are meant to develop and to improve the performances so that they can compete with European banks and they can respond in an efficient manner to the customersa€ needs. The purpose of this paper is to underline the main stages of evolution of the Romanian banking system since 1990 and to lay emphasize the perspectives on its evolution in the context of the actual economic crisis. By going through the stages previously mentioned in this paper , we can see that the Romanian banking system evolved positively, from the moment of the transition to the market economy, but in order for it to be functional and to contribute to the development of the economy as a whole, aspects related to the the supervision of the financial stability should be taken into consideration and in order to assure the stability of the financial system, the increase of the administrative capacity of the Central Bank should be considered, as well as balancing the structure of the creditation process, on coins, the improvement of the banking assetsa€ quality, the qualitative study of the NBRa€ s surveillance process, managing the contagion risk, etc. In order to achieve these objectives, the documentation by the investigation of a significant volume of works has been done, by scientifically acknowledged publications, analysis being applied, by deduction method and a significant volume of quantitative information was submitted to professional judgment. Concerns regarding this subject have been found in various paper works and in specialized books. We mention here the doctoral thesis of Elena Teodorescu Georgescu a€ The evaluation pattern of credit institutionsa€ prudential surveillance efficacya€ , the author of this work David Delia, with the work a€ Contributions regarding the improvement of the banking accountancy dealing with credits granted to non-financial clientsa€ and so on. An outstanding attention payed to this subject was the one of the governor of the National Bank of Romania, Mugur Isarescu, who issued a series of articles and books on this subject. Also, Silviu Cerna, Aurelian Paul Berea, Vasile Dedu, Nicolae Danila approached in their books the problem regarding the evolution of the Romanian banking system. The National Bank of Romania offers to its users, information regarding the evolution of the banking industry through the Reports
The Management of Operational Risk Specific to Non-banking Financial Institutions in the Context of Actual Financial Crisis
Nicolae DARDAC,Petronel CHIRIAC
Theoretical and Applied Economics , 2010,
Abstract: The current financial crisis is not a singular event in the history of crisis episodes. The essential difference between past episodes of financial turmoil and the actual crisis is the unprecedented severity, the pace of contagion and its global size. Financial markets have been seriously disturbed, threatening the robustness of financial institutions and their ability to meet current needs to properly manage the risk. One such risk is operational risk, which has become an important source of loss not only for credit institutions but, especially, for non-banking financial institutions (NFI). In this context, the main purpose of this study is to present the best techniques and methods of managing this risk, less addressed problem in the literature from our country.
IS THE NATIONALIZATION OF THE BANKING SECTOR A SOLUTION TO THE PRESENT FINANCIAL CRISIS?
RADU CRISTIAN MUSETESCU,RADU CRISTIAN MUSETESCU,RADU CRISTIAN MUSETESCU
Ad Alta : Journal of Interdisciplinary Research , 2012,
Abstract: We argue in this paper that the institutional premises of the contemporarybanking system are erroneously defined. In consequence, contemporary commercialbanks cannot operate under normal circumstances as any other sector of the economy.The three core elements of the contemporary financial system – namely fiat money,fractional reserve commercial banking and central banking – imply a system which isfundamentally socialized. The most logical coherent consequence of such aninstitutional setting is the full control and operation of the entire credit industry by thestate. The present crisis is a consequence of such an institutional setting and thenationalization of commercial banking – a logical step according to the premises of theinstitutional setting – will but speed up the process of a long depression.
FINANCIAL CRIME IN THE ROMANIAN BANKING SYSTEM
LUMINI?A DRAGNE,GEORGE DOREL MATEI,ANAMARIA TRANCA
Challenges of the Knowledge Society , 2012,
Abstract: The crime in the financial and banking system, through the disasters it produces, damages and large amount of victims, generates the largest economy damages, both national and international level. This phenomenon occurs and is manifested in a specific environment, the economy and finances one, takes different forms and operates with appropriate techniques. Most of the times, the banking system from Romania, has been used for personal grounds, which leads to serious damage of the Romanian economy. Insufficiently matured economic or imperfect judicial environments are only some of the factors that led to the commission of crimes in this area. Also, this type of crime has been determined, among other things, by the economic status, the social structure or the stage of development of the society.
The Regulation Framework for the Banking Sector: The EMU, European Banks and Rating Agencies before and during the Recent Financial and Debt Crisis  [cached]
Eleftherios Thalassinos
EIRP Proceedings , 2012,
Abstract: A regulation framework for the banking sector should be characterised by transparency,responsibility and performance in several important areas. These areas are the global and Europeanframework for corporate financial reporting (CFR), risk management (RM), stockholder value creation(SVC), corporate governance (CG), corporate social responsibility (CSR) and sustainable development (SD).The regulation framework for the banking sector must also consider the fiscal and monetary environment inwhich a banking institution operates. The global rating system and the rating agencies will also have animportant impact on any regulation framework for the banking sector. These two factors play a key role whena financial, credit or debt crisis occurs. In this article, a holistic regulation framework for the banking sector ispresented. The article is based on European banks that are part of the European Monetary Union (EMU).Initially, it focuses on the timelines and review the integration of the European Monetary Union, relevantlegislation and information on member countries’ banking sectors. This information creates the frameworkfor the proposed model. The article considers all of the above factors in creating a holistic regulationframework for the banking sector to present in the context of the recent financial, credit and debt crises thathave taken place in the EMU.
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