Profitability – risk relationship in Latin America region of financial industry
DOI:
https://doi.org/10.31637/epsir-2024-508Keywords:
Profit, Risk, Financial, Banking, Fintech, Digital, Portfolios, InvestmentAbstract
Introduction: The present article analyzes the profitability-risk relationship in the financial industry of Latin America, examining traditional banking sector entities as well as digital or Fintech entities. The Methodology developed uses Markowitz's Efficient Frontier, evaluating investment portfolio options to achieve an optimal combination of assets that generates the highest possible return with an acceptable level of assumed risk. The Results show that traditional entities have relatively low volatility levels and favorable returns, while digital or Fintech entities present higher returns but also assume higher levels of exposure due to volatility. The study highlights the importance of including financial technology entities in portfolios to access new options for considerable returns and greater diversification. Discussions: The limitations of the study are reviewed, such as the lack of a greater number of Fintech issuers in stock markets, providing future research options aimed at including a larger number of issuers and incorporating political and economic elements that affect prices. It is also Concluded that diversification, by considering both traditional and Fintech entities, allows for more options and criteria to optimize investments in the region.
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