IMPACT OF COVID-19 PANDEMIC ON THE RISK AND RETURN TRADE-OFF: THE ROLE OF DIVERSIFICATION

  • Maram Darkhabani Beirut Arab University (BAU), Beirut
Keywords: liquidity risk, credit risk, market risk, solvency risk, COVID 19

Abstract

The Covid-19 pandemic triggered a sharp decline in asset values. As a result, a well-diversified portfolio over many industries provides the portfolio with the stability it needs to sustain against losses. Diverse financial assets and industries would differ significantly throughout history, whether the economy has been growing or not. Financial decisions must not be designed mainly based on a response to recent incidents but on long-term plans that implement diversification concepts.

The population of the research includes 39 Lebanese commercial banks. Using the annual reports of five different banks, we have compiled secondary data that contain the most often used ratios like ROE as a unit of measurement for the financial performance of the banks.

Risk management programs and bank performance, notably ROA and ROE, are commonly accepted to correlate. As a result, branch managers' inspections were an active credit risk assessment approach that had a favourable influence on the banks' financial stability. Findings also indicated that the traditional Bank's ROE profitability is strongly linked to its credit risk assessment strategy, as shown by regression analysis.

 

Author Biography

Maram Darkhabani, Beirut Arab University (BAU), Beirut

Head of Business Development- International Commercial Contracting Co. (ICC),

DBA Candidate, Beirut Arab University (BAU), Beirut, Lebanon

Research interests: financial markets, finance management, corporative finance

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Published
2022-05-30
How to Cite
Darkhabani, M. (2022). IMPACT OF COVID-19 PANDEMIC ON THE RISK AND RETURN TRADE-OFF: THE ROLE OF DIVERSIFICATION. The EUrASEANs: Journal on Global Socio-Economic Dynamics, (3(34), 71-82. https://doi.org/10.35678/2539-5645.3(34).2022.71-82