Sustainable profitability in volatile cyclical markets
Abstract
Market conditions are prone to change rapidly, limiting the ability of lenders to mitigate losses. Furthermore, lenders’ behaviour can often contribute to market volatility as lending initially drives up market leverage, and this is followed by greatly reduced credit supply following a market correction as capital constraints and heightened risk sensitivities constrict banks’ willingness to lend. This paper analyses how banks can successfully ensure it is being rewarded for the risk presented by a cyclical and volatile market. It also discusses how a bank can avoid presenting its shareholders with loss of their capital without missing profitable lending opportunities? In short, how should a bank seek commercial sustainability in volatile cyclical markets?
The full article is available to subscribers to the journal.
Author's Biography
Hanna Sarraf is a senior banking executive with over 23 years of risk and regulatory management experience gained across all major industry segments in a wide number of geographic markets. He holds a specialised master’s degree in Financial Engineering from the École Supérieure des Sciences Economiques et Commerciales (ESSEC) Business School and an MSc in Finance from Paris-Dauphine University in France. He has written many papers on financial risk management and is a frequent speaker at leading UK and international conferences.
Citation
Sarraf, Hanna (2020, March 1). Sustainable profitability in volatile cyclical markets. In the Journal of Risk Management in Financial Institutions, Volume 13, Issue 2. https://doi.org/10.69554/GUFI2009.
Publications LLP