ON ANALYSIS AND CONTROL OF FINANCIAL RISKS AND A VIEW OF TURKISH AND EUROPEAN BANKS AND FINANCIAL MARKETS

Abstract

In this paper, four main financial risks that banks get exposed to in functioning as intermediary institutions are analysed and decomposed into their components. After that the two components of these risks namely; volatility and sensitivity, are calculated for both Turkish and European Union commercial banks in aggregates. Volatility is the exogenous component of risk and hence it is out of control of banks. Volatility can partly be controlled by the governments. On the other hand sensitivity is calculated as using banks' balance sheet figures. Thus, it is under the control of banks and it can be managed by them.

Keywords

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ON ANALYSIS AND CONTROL OF FINANCIAL RISKS AND A VIEW OF TURKISH AND EUROPEAN BANKS AND FINANCIAL MARKETS

Abstract

In this paper, four main financial risks that banks get exposed to in functioning as intermediary institutions are analysed and decomposed into their components. After that the two components of these risks namely; volatility and sensitivity, are calculated for both Turkish and European Union commercial banks in aggregates. Volatility is the exogenous component of risk and hence it is out of control of banks. Volatility can partly be controlled by the governments. On the other hand sensitivity is calculated as using banks' balance sheet figures. Thus, it is under the control of banks and it can be managed by them. 

Keywords

• ANALYSIS
• CONTROL
• FINANCIAL

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