Evaluating the Systemic Risk and Its Impact on Profitability and Liquidity; Evidence from European Countries

The objective of this research study is to establish if there is systemic risk and its impact on profitability, liquidity of the banks in Europe. This study used various financial performance ratios of 50 banks operating in different European countries to investigate if such relationship exists over seven year period. Before working on evaluating the systemic risk we need to know that in order to shape up the financial structure of any firm, the operating performance is of crucial importance. It is expected that the outcomes of this research are of importance both to investors as well as bank managers, as these findings will help them in fully analyzing the effects of various strategic choices keeping in view related to risk profile of banks. Some implications of the potential policy which based on the new capital requirements in view of the risk-leverage relationship have also been discussed in this dissertation. Keyword : Financial Risk, Business Risk, Profitability, Liquidity

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