Risk Assessment of the Banking Industry under the COVID-19 Crisis

Ziying Chen

doi:10.54254/2754-1169/34/20231670

Research Article

Open access

Published on 10 November 2023

Download pdf

Chen,Z. (2023). Risk Assessment of the Banking Industry under the COVID-19 Crisis. Advances in Economics, Management and Political Sciences,34,37-42.

Export citation

Risk Assessment of the Banking Industry under the COVID-19 Crisis

Ziying Chen *^,1,

¹ Adam Smith Business School, University of Glasgow, Glasgow G12 8QQ, United King-dom

* Author to whom correspondence should be addressed.

https://doi.org/10.54254/2754-1169/34/20231670

Abstract

This paper shows that increased bank asset liquidity does not necessarily reduce risk-taking. The help provided by the government in the epidemic crisis has also been provided after the damage occurred. On the other hand, the merger of banks is not a good thing for low-risk banks. Regulators should conduct frequent financial reports on banks to ensure that the risk of sudden default due to weak supervision is reduced. Foreign exchange risk management is especially important for banks involved in cross-border transactions and foreign exchange business. Reasonable control of the market exchange rate prohibits the impact of the foreign exchange black market on the market. The COVID-19 epidemic has led to fluctuations and instability in global exchange rates and the banking industry. For the foreign exchange transaction risks caused by exchange rate fluctuations, banks usually need various foreign exchange derivatives instruments to ensure that foreign exchange risks are effectively managed.

Keywords

systemic risk, banking industry, risk assessment

View pdf

References

[1]. Wagner, W.: The liquidity of bank assets and banking stability. Journal of Banking & Finance 31(1), 121-139 (2007).

[2]. Khan, M. S., Scheule, H., & Wu, E.: Funding liquidity and bank risk taking. Journal of Banking & Finance 82, 203-216 (2017).

[3]. Abdul-Rahman, A., Sulaiman, A. A., & Said, N. L. H. M.: Does financing structure affects bank liquidity risk? Pacific-Basin Finance Journal 52, 26-39 (2018).

[4]. Chen, W. D., Chen, Y., & Huang, S. C.: Liquidity risk and bank performance during financial crises. Journal of Financial Stability, 56, 100906 (2021).

[5]. Fiordelisi, F., & Marques-Ibanez, D.: Is bank default risk systematic? Journal of Banking & Finance 37(6), 2000-2010 (2013).

[6]. Nucera, F., Lucas, A., Schaumburg, J., & Schwaab, B.: Do negative interest rates make banks less safe? Economics Letters 159, 112-115 (2017).

[7]. Shikimi, M.: Risk-taking and bank competition under a low-interest rate environment: Evidence from loan-level data. Pacific-Basin Finance Journal 78, 101945 (2023).

[8]. López-Penabad, M. C., Iglesias-Casal, A., & Neto, J. F. S.: Effects of a negative interest rate policy in bank profitability and risk taking: Evidence from European banks. Research in International Business and Finance 60, 101597 (2022).

[9]. Altunbas, Y., Gambacorta, L., & Marques-Ibanez, D.: Do bank characteristics influence the effect of monetary policy on bank risk? Economics Letters, 117(1), 220-222 (2012).

[10]. Leonard, O.: Foreign Exchange Markets and Triggers for Bank Risk in Developing Economies. Bank Risk Management in Developing Economies, 459-485 (2016).

Cite this article

Chen,Z. (2023). Risk Assessment of the Banking Industry under the COVID-19 Crisis. Advances in Economics, Management and Political Sciences,34,37-42.

Data availability

The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.

Disclaimer/Publisher's Note

The statements, opinions and data contained in all publications are solely those of the individual author(s) and contributor(s) and not of EWA Publishing and/or the editor(s). EWA Publishing and/or the editor(s) disclaim responsibility for any injury to people or property resulting from any ideas, methods, instructions or products referred to in the content.

About volume

Volume title: Proceedings of the 7th International Conference on Economic Management and Green Development

Conference website: https://www.icemgd.org/

ISBN：978-1-83558-089-9(Print) / 978-1-83558-090-5(Online)

Conference date: 6 August 2023

Editor：Canh Thien Dang

Series: Advances in Economics, Management and Political Sciences

Volume number: Vol.34

ISSN：2754-1169(Print) / 2754-1177(Online)

© 2024 by the author(s). Licensee EWA Publishing, Oxford, UK. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license. Authors who publish this series agree to the following terms:
1. Authors retain copyright and grant the series right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this series.
2. Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the series's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this series.
3. Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See Open access policy for details).