Risk Management Theory: A Comprehensive Empirical Assessment

Klimczak, Karol Marek

doi:10.2139/ssrn.1031850

Cited by 18 publications

(15 citation statements)

References 31 publications

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“…Risk capital, also referred as capital at risk (Duliniec, 2011), is identified with financing securing the negative effects of risk occurring (Wieczorek-Kosmala, 2017). The concept of risk capital is not new (Merton & Perold, 1993a, 1993bMatten, 2000;Culp, 2002aCulp, , 2002bCulp, , 2002cShimpi, 2001;Doherty, 2000Doherty, , 2005Ishikawa, Yamai, & Ieda, 2003), although it is still up-to-date, due to the dynamically developing theory of risk management (Banks, 2004;Graham, 2008;Jajuga, 2007;Rejda, 2001;Williams Jr. & Heins, 1989;The Conference Board of Canada, 2003;Klimczak, 2007;Spikin, 2013;Nocco & Stulz, 2006;Purdy, 2010;Dionne, 2013;International Organization of Standarization [ISO], 2009;Kaplan & Mikes, 2016;Ennouri, 2013;Schieg, 2006;OECD, 2014), including methods of its measurement and reduction (Ratliff & Hanks, 1992; E. J. Vaughan & T. Vaughan, 2003;Scott & Vessey, 2002;ISO, 2009;The National Archives, 2017;Jajuga et al, 2017;Protivity, 2006;Iacob, 2014;McCuaig, 2008).…”

Section: Literature Studiesmentioning

confidence: 99%

Sectoral Analysis of the Effectiveness of Bank Risk Capital in the Visegrad Group Countries

Nocoń

Pyka

2019

Journal of Business Economics and Management

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Bank risk capital (capital at risk) is identified with the value of banks’ own funds maintaining to absorb potential losses and protect against insolvency. It is calculated for the capital adequacy ratios, recommended by the Basel Committee on Banking Supervision. On other words, it is a kind of banks’ capital that financing securing the negative effects of risk occurring. A comparative analysis of effectiveness of bank risk capital in the Visegrad Group countries, constituting the main objective of the study, results from the needs indicated in the already conducted preliminary research. In the article, statistical and econometric methods were used, based on linear regression models. The conducted research were aimed to verify the research hypothesis stating that in the analyzed banking sectors of the Visegrad Group countries there is a positive correlation between banks' profitability and a level of their bank risk capital. The study indicated that net profit of the analyzed banking sectors increases with a growth of total own funds, while profitability is diversified in individual countries. Declining operational efficiency results from the growing cost of obtaining and maintaining risk capital.

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Section: Literature Studiesmentioning

confidence: 99%

Sectoral Analysis of the Effectiveness of Bank Risk Capital in the Visegrad Group Countries

Nocoń

Pyka

2019

Journal of Business Economics and Management

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“…Financial economics approach to corporate risk management builds on the Modigliani Miller paradigm and has so far been the most prolific in terms of both theoretical model extensions and empirical research (Klimczak, 2013). This theory stipulates that hedging leads to lower volatility of cash flow and therefore lower volatility of firm value.…”

Section: The Financial Economic Theorymentioning

confidence: 99%

Effects of Credit Management on Financial Performance of Transport Firms in Mombasa County

2019

IBM Journal

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There has been an increasing attention towards transport firms from scholars and practitioners globally in the recent past due to their significant contribution to economies in both developing and developed economies (Asiedu & Freeman, 2016). They are a backbone of many economies. In Europe, for instance, transport firms accounted for almost 85% of net new jobs by 2010 (Uwonda, Okello, & Okello, 2014). This is also true in the United States where in 2012, the transport firms accounted for almost half the number of employees in the economy. According to Caruso (2015), 51.9 percent of all employees were employed by large transport firms while the rest were divided between very small transport firms. Thus, about 56.1 million people were employed by transport firms in the US by 2012 census data. This is more than double the number that were employed by transport and logistics in US by 2004 according to (Kozlow, 2014). Currently, transport firms in US contribute to over half of non-farm GDP. Nowhere else are transport firms as important as they are in Africa. Transport firms are the biggest job creators in all African economies and an engine of national economic growths. They are also touted as the seeds of big businesses playing the role of suppliers of large enterprises in Africa. However, small businesses are not only suppliers but also consumers of products (Abor & Quartey, 2017). In the national economies in Africa, transport firms account for quarter of the GDP; are more productive than large companies, innovate more, have more impact on social and cultural issues, and play a major part in the future of Africa"s economic growth (Uwonda et al., 2014). Transport firms play a significant role in East Africa through alleviation of poverty and participation in the global economy through import-export trade. This has helped develop the national economies. For example, transport firms account for about 40% of the private sector in Kenya. They are also a major source of employment and wealth creation to the masses especially the women and youth and unskilled or low-skilled workers. They are also a major contributor to tax revenues and are supplies to larger corporations in terms of supply of goods and services (Ernst & Young, 2016). Credit (or trade credit) management is the center of a business entity for both short and long-term survival. Credit management both the short term and long terms financial aims (Uwonda et al., 2014). It brings together efforts concerned with payment for goods or services consumed collection of cash from clients who have consumed products or services on credit and general liquidity management (Aminu, 2014). According to Muller (2015), transport firms must understand credit management if they intend to manage their cash flows. The author noted that credit management helps transport firms to project their cash flow requirements. This helps them optimize their revenues and expenditure timing and amounts. Further, Yaqub & Husain (2015) noted that in order for small businesses to grow, they must ...

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“…Its essence concerns to the conscious decision of the economic entity taking over the consequences of random events in case of risk occurrence. Therefore, the concept of risk capital is not new (Merton & Perold, 1993a, 1993bMatten, 2000;Culp, 2002aCulp, , 2002bDoherty, 2005Doherty, , 2000Ishikawa, Yamai, & Ieda, 2003), although it is still up-todate due to the dynamically developing Risk Management Theory (Banks, 2004;Graham, 2008;Rejda, 2001;Williams Jr. & Heins, 1989;The Conference Board of Canada, 2003;Klimczak, 2007;Purdy, 2010;Versluis, 2011;Dionne, 2013;European Standard, 2010;Kaplan & Mikes, 2016;Ennouri, 2013;Schieg, 2006;OECD, 2014), including the methods of its measurement and limitations (Ratliff & Hanks, 1992;Vaughan & Vaughan, 2003;European Standard, 2010;The National Archives, 2017;Jajuga et al, 2017;Protivity, 2006;Iacob, 2014;McCuaig, 2008).…”

Section: Risk Capital and Banks' Own Funds The Concept Previous Rementioning

confidence: 99%

Effectiveness of Risk Capital (Own Funds) in the Polish Banking Sector in the Years of 2002–2016

Nocoń

Pyka

2018

10th International Scientific Conference “Business and Management 2018”

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The analysis of effectiveness of risk capital in the Polish banking sector have become the main aim of the study. In the article, statistical and econometric methods were used, based on a linear regres-sion model of net profit in relation to the value of own funds of the banking sector in Poland in the years of 2002–2016. Next, through the quartile method, there were estimated the relations between effectiveness and a level of risk capital of the largest banks in Poland. Conducted research were aimed to verify the research hypothesis stating that in the Polish banking sector there is a positive cor-relation between net profit and banks’ own funds, which constitute an essential component of bank risk capital.

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Risk Management Theory: A Comprehensive Empirical Assessment

Cited by 18 publications

References 31 publications

Sectoral Analysis of the Effectiveness of Bank Risk Capital in the Visegrad Group Countries

Sectoral Analysis of the Effectiveness of Bank Risk Capital in the Visegrad Group Countries

Effects of Credit Management on Financial Performance of Transport Firms in Mombasa County

Effectiveness of Risk Capital (Own Funds) in the Polish Banking Sector in the Years of 2002–2016

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