Judging the True Health of Finance Institutions Based on Risk Behavior and Operation Performance

As the core of the financial system, financial institutions are playing a significant role in financial stability in the process of development; traditional analysis mainly discusses the institution’s revenue of assets. However, the current financial stability system pays more attention to financial...

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Bibliographic Details
Published in:Mathematical problems in engineering 2022-11, Vol.2022, p.1-21
Main Authors: Gu, Ruitao, Zhang, Qiaoyun, Zhou, Wei
Format: Article
Language:English
Subjects:
Behavior
Capital assets
Credit risk
Diversification
Efficiency
Financial institutions
Performance indices
Principles
Product returns
Profits
Risk
Stability analysis
Stock exchanges
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Summary:As the core of the financial system, financial institutions are playing a significant role in financial stability in the process of development; traditional analysis mainly discusses the institution’s revenue of assets. However, the current financial stability system pays more attention to financial institution risk behavior and operational efficiency; to solve the previous two issues, we propose the two-stage model. Firstly, we measure the dynamic financial institution’s risk behavior coefficient based on the volatility and return principle for different institutions. Secondly, according to the cross-efficiency principle, different financial institution operation efficiencies that assimilate risk behavior will be obtained, and the institution risk behavior valve is also given. Finally, we analyze the 31 banks listed in China to verify the validity and applicability of the two-stage model; the model has made a certain theoretical contribution to the financial institution analysis model, especially when we consider the risk behavior and multiple indexes. Therefore, the two-stage model that we built can help investors make a portfolio in banking enterprises; it also can help financial institutions evaluate their risk behavior for making an optimal decision and help government agencies to supervise banks based on their risk behavior.
ISSN:1024-123X
1563-5147
DOI:10.1155/2022/3532409