Bank Capital, Risk and Performance in European Banking. A Case Study on Seven Banking Sectors
The aim of this paper is to evaluate the way in which capital influences profitability of banks and exposure to risk in seven European countries: Austria, Bulgaria, Greece, Italy, Romania, the Netherlands and Hungary. Based on previous studies, we developed a model of simultaneous equations to analyse the relation between capital, risk and performance. The model includes 68 banks and covers the period between 2006 and 2011. In addition, estimations have been made for the three capital ratios (own capital ratio, tier 1 ratio and capital adequacy ratio) for each country included in this study. The obtained results have revealed the existence of a negative relationship between capital and taken risks and a positive relationship between capital and profitability, as well as between risk and profitability.
ABSTRACT What follows is a short note on James Fenske's article, The Causal History of Africa: A Response to Hopkins (Economic History of Developing Regions, Vol. 25, No. 2, 2010). The intention is to prevent what I regard as a wholly unnecessary bifurcation of effort in a field that, more than many others, needs its few practitioners at least to agree on the broad framework within which disagreement can then take place.