Application of structural equation modeling on the linkage of risk management, capital management and financial management in the Philippine banking industry

• Main Author: Espanol, JAmes Lawrence J.
• Format: text
• Language: English
• Published: Animo Repository 2008
• Subjects: Bank management; Financial risk management; Banks and banking > Risk management > Philippines; Structural equation modeling; Physical Sciences and Mathematics
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/2300
• Institution: De La Salle University

This paper was based on the study entitled Application on Structural Equation Modeling on the Linkage of Risk Management, Capital Management, and Financial Management for Insurance Industry by Ming-Ming Wen, Hong-Jen Lin, and Patricia Born. The Bangko Sentral ng Pilipinas (BSP) is the regulatory authority for banks in the Philippines and some of the regulations they impose can be found in the Magna Carta. Banks make use of risk, capital, and financial management strategies to attain firm value maximization. Since these different types of management have different goals, it is possible that their respective decisions or strategies employed in attaining firm value maximization may hinder or support each other. Also, the presence of the regulations imposed by the BSP may have an influence on these decisions or strategies as well. In this study, a model is hypothesized in order to examine the possible influence that the regulations imposed by the BSP may have on risk, capital, and financial management and also the possible effects that the interaction of these three types of management may have on each other by making use of Structural Equation Modeling (SEM). The researcher has established that in the Philippine banking setting, the regulations imposed by the BSP only affect financial management decisions and that not all of the managerial types interact with each other.