The Effect of Risk Type on ERM Effectiveness and Bank Performance: An Empirical Analysis of European Banks

Sari Minjari Damayanti

2018

Abstract

Ths study aims to provide empirical evidence on the significance of risk types on the effectiveness of ERM and to the relationship between effective risk management and entities’ performance by using logistic and residual analysis in European banking sectors in the period 2013-2016. This study provides empirical evidence on the significance of credit risk and off-balance sheet exposure on the effectiveness of enterprise risk management. The significance of credit risk may arise due to the banks close supervision on their credit risks by implementing processes to monitor key risks to ensure they stay within the approved risk appetite and mitigating efforts. Additionally, the significance of off-balance-sheet items may due to the consideration that off-balance-sheet risk is the integral part of banks’ risk profile that need to be assessed carefully. While this study does not provide support to contingency theory proposed by Gordon et. al. (2009), it provides support for Kaplan and Mikes (2014) conception that risk management will be most effective when it matches the intrinsic nature and controllability of the different types of risk the organization faces. As this study only focuses on the banking sector, some standard measurement as suggested by previous studies cannot be fully measured. It is possible that these results may not be generalizable to a broader range of risk and risk management research. This study provides the empirical evidence of the significance of different type of risks on the effectiveness of ERM in the European banks.

Paper Citation

in Harvard Style

Damayanti S. (2018). The Effect of Risk Type on ERM Effectiveness and Bank Performance: An Empirical Analysis of European Banks.In Proceedings of the Journal of Contemporary Accounting and Economics Symposium 2018 on Special Session for Indonesian Study - Volume 1: JCAE Symposium, ISBN 978-989-758-339-1, pages 876-884. DOI: 10.5220/0007022408760884

in Bibtex Style

@conference{jcae symposium18,
author={Sari Minjari Damayanti},
title={The Effect of Risk Type on ERM Effectiveness and Bank Performance: An Empirical Analysis of European Banks},
booktitle={Proceedings of the Journal of Contemporary Accounting and Economics Symposium 2018 on Special Session for Indonesian Study - Volume 1: JCAE Symposium,},
year={2018},
pages={876-884},
publisher={SciTePress},
organization={INSTICC},
doi={10.5220/0007022408760884},
isbn={978-989-758-339-1},
}

in EndNote Style

TY - CONF

JO - Proceedings of the Journal of Contemporary Accounting and Economics Symposium 2018 on Special Session for Indonesian Study - Volume 1: JCAE Symposium,
TI - The Effect of Risk Type on ERM Effectiveness and Bank Performance: An Empirical Analysis of European Banks
SN - 978-989-758-339-1
AU - Damayanti S.
PY - 2018
SP - 876
EP - 884
DO - 10.5220/0007022408760884