Title: Evaluating the systematic risk and its impact on profitability and liquidity; evidence from European countries

Authors: Omar Masood; Kiran Javaria

Addresses: Quaid-i-Azam School of Management Sciences, Quaid-i-Azam University, Islamabad, 45320, Pakistan ' School of Accountancy and Finance, University of Lahore, Islamabad, Pakistan

Abstract: The purpose of this research study is to establish if there is systematic risk and if it has impact on profitability, liquidity of the banks in Europe. This study used various financial performance ratios of 100 banks operating in different European countries to investigate if such relationship exists over a five-year period (2012 to 2016). Before working on systematic risk evaluation, we need to know that in order to shape up the financial structure of any firm the operating performance has importance. It is expected that the outcomes of this research are very important in both perspective of investors and bank managers, as these findings will help them to fully analyse the effects of various strategic choices keeping in view related to risk profile of banks. Some implications of the potential policy which are based on the new capital requirements in view of the risk-leverage relationship have also been discussed in this study.

Keywords: financial risk; business risk; profitability; liquidity; systematic risk; financial performance; capital requirements; risk-leverage.

DOI: 10.1504/IJESB.2021.117342

International Journal of Entrepreneurship and Small Business, 2021 Vol.43 No.4, pp.463 - 478

Accepted: 28 Jan 2019
Published online: 01 Sep 2021 *

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