Measuring de banking activity of German banks by function utility

Abstract

The accounting utility function of German banks measures risks of their decision making according to their positions on Edgeworth box. The banks analyzed are included in the Euro Stock 40 index and therefore their audited financial statements must meet fair value criteria. This proposed measure is a single indicator that is obtained objectively and allows stakeholders to contrast it with alternative information that they trust. The manuscript contrasts it with the Basel criteria and stock market indicators, to achieve consensus between the regulatory requirements of banking activity and stakeholders in the broadest possible sense. Concluding that the stability of the currency is the regulatory line of banking activity, and the price market follows the trend of banking capital structures. The proposed utility function is sensitive to these variations, it allows anticipating the market trend and, as it is a measure of dispersion, correcting the value of the variables the correlations between the analyzed variables improve.