How Does Risk Management Affect Financial Performance? Evidence from Chinese Listed Commercial Banks
The banking sector is one of the primary drivers of economic development. This sector has been affected by various crises throughout its history – most recently, the 2008 financial and economic crisis. In response, banking institutions have had to make diverse changes to their procedures and deal with new concerns related to changes within markets. One of the main recent developments in this sector is the new commercial function assigned to bank branch front-office employees, who have become responsible for selling financial products and services, as well as recruiting and retaining clients. As a result, the sector needs new employee performance evaluation methods in line with banks and staff membersrsquo; requirements. This study combined fuzzy cognitive mapping techniques and the system dynamics (SD) approach to develop a well-informed performance analysis system for assessing bank branch front-office employees. The proposed system was validated by the Business Process Management Competence Center director at Millennium BCP – a Portuguese private banking corporation. The main difference between the model constructed in the present research and current evaluation practices is that the criteria were collected directly from multiple specialists working at different commercial banks, who deal daily with this decision problem. The modelrsquo;s theoretical and practical implications are also discussed.Due to their importance, commercial banks currently play a very important role in national financial systems. The profitability of commercial banks depends on how they manage their loans, and credit risk management is thus crucial in the banking system, risk management is significant activity of commercial bank. The main purpose of this study is to observe the extent to which bank profitability is dependent on credit risk management, with a focus on commercial banks in the Western Balkans (Kosovo, Albania, North Macedonia and Serbia). The results reveal a certain assured correlation among credit risk as well as the profitability of banks, where the ratio of non-performing loans (NLPR) has a positive effect on return on equity (ROE) and return on assets (ROA). Capital Insufficiency (CAR) shows that positive dependence is without any statistical significance on return on equity (ROE) and return on assets (ROA).The study presents the problems of risk management of a commercial Bank as the most important element in the overall banking management system. The relevance of the study is due to the current economic and political situation in the country, as well as the instability of market conditions, which significantly complicated the risk management system in commercial banks, which contributed to the deterioration of their financial condition. The processes taking place in the global financial market in recent years have a significant impact on the banking system, significantly increasing Bank risks and reducing the financial stability of credit institutions. Differences are highlighted that reflect the priority aspects in assessing the risk management of a commercial Bank from the authors lsquo; point of view. Risk management strategies in credit institutions are considered. A comparative analysis of the methodologies used to assess the risks and capital adequacy of commercial banks in Russia and abroad has been carried out, and features of their use have been identified.Performance management of commercial banks is an important aspect of banking business management, this paper makes study about how to use the Balanced Scorecard as a tool, which is applied to commercial banks performance management system, and points out that it breakthrough the defects in the traditional single application of financial indicators which measures performance. And it raises the value of performance management appraisal system based on the introduction of customer factors, internal business processes, employee learning and growth and financial factors. This paper also makes study about the commercial banks in the performance of the balanced scorecard management system mechanism, the strategy of application, application limitations, and outlook on the future of commercial banking services model based on the above points.
The article discusses the main ways and methods of financial risk management in a commercial bank. The main goal of financial risk management is to reduce financial losses through the implementation of certain methods, such as hedging, insurance, provisioning, etc. The current problem of financial risk management in the banking sector indicates the absence of an integral system of their management. To overcome critical situations and create an innovative risk management system in banking institutions, it is advisable to develop and implement new and more effective methods of banking risk management.In modern conditions, the methods of classical economic analysis are not enough to solve the problem of bank stability. This requires the development of methods and tools to analyze the current situation in the bank and to develop sound management decisions aimed at ensuring the stability of the bank. The article notes that the analysis of the influence of the structure and quality of assets on the profitability of commercial banks is an important step for assessing the financial position and reliability of a bank, and a method is proposed for constructing a model of the dependence of bankrsquo;s profitability on the factors that determine it. The scientific sources were the works of Russian and foreign researchers in the field of modeling and characteristics of the banking system, financial stability of credit institutions, assessment of the creditworthiness of potential borrowers, system organization and information technology. The article uses the methods of economic analysis, differential calculus and mathe
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