The firm’s total level of risks

The article "The impact of capital structure on the cost of capital: Evidence from Viet Nam petroleum trading firms" examines the relationship between the cost of capital and the capital structure of enterprises by analysing the data of 31 petroleum trading enterprises being listed on Vietnam stock market from 2014 to 2019.

6p nhanchienthien 25-07-2023 10 4   Download

Bank balance sheets are highly leveraged. The average ratio of total assets to shareholders’ capital is about three for non-financial companies, but it is six times that figure for banking firms. 2 From the shareholders’ perspective, higher bank leverage boosts the return on equity for any given level of bank profits. This, however, imposes higher risk, since leverage also increases the volatility of that return. Indeed, in most advanced economies bank equity prices have been more volatile than those of non-financial companies in the last four decades.

19p quaivattim 04-12-2012 44 1   Download

The bottom line of the table grosses up the numbers for industry totals, by assuming that 80% is covered by the top 10 firms. For the margin lending we assume 75% is covered by member of the NYSE. The main point to note is that counterparty exposure differs considerably between the prime brokers, with higher risk-taking firms (to generate higher returns) showing high exposures relative to tier 1 capital, and more conservative firms showing much lower ratios. The total exposure of the top 10 firms is about USD 2.9 trillion, and total Tier 1 capital is around...

20p quaivatdo 18-11-2012 55 4   Download