Accounting, Regulatory Metrics, and Banks’ Performance: An Exploratory Analysis and Implications for Risk Management
Has the time come to look beyond Return on Equity as the best indicator of a bank’s performance?
That question was very much on the mind of Moody’s Analytics researchers as they empirically tested the relationship between accounting and regulatory measures (such as CET1 ratio, leverage ratio, coverage ratio, and NPL) and banks’ subsequent performance.
The research found some surprising results.
For example, a simple metric related to credit risk stands out as the most informative measure for the banks studied. From this study, there are also other implications for banks’ risk management practices.
In this webinar, we will explore the desirability of ROE as a performance indicator, as well as:
- What are the better metrics to gauge performance?
- Is regulatory capital a useful measurement?
- The advantages of economic capital as a measurement
- Correlating accounting and regulatory metrics with bank performance
- John M Anderson, Journalist, Risk.net
- Sidhartha Dash, Research Director, Chartis
- Dr. Jing Zhang, Managing Director and Global Head of Research and Modeling, Moody's Analytics