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On Risk, Leverage and Banks: Do highly Leveraged Banks take on Excessive Risk?
Koudstaal, Martin; Wijnbergen, Sweder van - Tinbergen Instituut - 2012
This paper deals with the relation between excessive risk taking and capital structure in banks. Examining a quarterly dataset of U.S. banks between 1993 and 2010, we find that equity is valued higher when more risky portfolios are chosen when leverage is high, and that more risk taking has a...
Persistent link: https://www.econbiz.de/10011257139
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Convertible Bonds and Bank Risk-Taking
Martynova, Natalya; Perotti, Enrico - Tinbergen Instituut - 2012
We study the effect of going-concern contingent capital on bank risk choice. The possibility of debt for equity conversion forces deleveraging in highly levered states, when risk incentives are worse. The additional equity reduces endogenous risk shifting by diluting returns in high states. An...
Persistent link: https://www.econbiz.de/10011256836
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Risk Diversification by European Financial Conglomerates
Slijkerman, Jan Frederik; Schoenmaker, Dirk; Vries, … - Tinbergen Instituut - 2005
We study the dependence between the downside risk of European banks and insurers. Since the downside risk of banks and insurers differs, an interesting question from a supervisory point of view is the risk reduction that derives from diversification within large banks and financial...
Persistent link: https://www.econbiz.de/10011255734
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The Political Economy of Financial Systems
Haber, Stephen; Perotti, Enrico - Tinbergen Instituut - 2008
of capital markets and banking systems as well as the distribution of access to external finance across firms …
Persistent link: https://www.econbiz.de/10011255875
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The Political Economy of Finance
Perotti, Enrico - Tinbergen Instituut - 2013
This survey reviews how a recent political economy literature helps explaining variation in governance, competition …
Persistent link: https://www.econbiz.de/10011256233
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Banking Unions: Distorted Incentives and Efficient Bank Resolution
Zoican, Marius A.; Górnicka, Lucyna A. - Tinbergen Instituut - 2013
A banking union limits international bank default contagion, eliminating inefficient liquidations. For particularly low … moderate moral hazard, as the banking union encourages risk taking by systemic institutions. If banks hold opaque assets, the … net welfare effect of a banking union can be negative. Restricting the banking union mandate restores incentives …
Persistent link: https://www.econbiz.de/10011255924
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Competition and Entry in Banking: Implications for Stability and Capital Regulation
Boot, Arnoud W.A.; Marinc, Matej - Tinbergen Instituut - 2006
We assess the influence of competition and capital regulation on the stability of the banking system. We particularly … requirements can lead to more entry into banking, essentially by reducing the competitive strength of lower quality banks. We also … show that competition improves the monitoring incentives of better quality banks and deteriorates the incentives of lower …
Persistent link: https://www.econbiz.de/10011257508
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Will Islamic Banking make the World less risky? An Empirical Analysis of Capital Structure, Risk Shifting and Financial Stability
Farooq, Moazzam; Wijnbergen, Sweder van; Zaheer, Sajjad - Tinbergen Instituut - 2015
We use a classic Merton credit risk framework to argue that Islamic Banking Institutions (IBIs) face less incentive to … take on risks than Conventional Banking Institutions (CBI). IBIs have less incentive for risk shifting both in and outside …, IBIs, and Islamic and conventional subsidiaries of mixed banking institutions in Pakistan. We find that full …
Persistent link: https://www.econbiz.de/10011272595
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Will Islamic Banking make the World less risky? An Empirical Analysis of Capital Structure, Risk Shifting and Financial Stability
Farooq, Moazzam; Wijnbergen, Sweder van; Zaheer, Sajjad - Tinbergen Instituut - 2015
We use a classic Merton credit risk framework to argue that Islamic Banking Institutions (IBIs) face less incentive to … take on risks than Conventional Banking Institutions (CBI). IBIs have less incentive for risk shifting both in and outside …, IBIs, and Islamic and conventional subsidiaries of mixed banking institutions in Pakistan. We find that full …
Persistent link: https://www.econbiz.de/10011275100
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A Capital Adequacy Buffer Model
Allen, David; McAleer, Michael - Tinbergen Instituut - 2013
In this paper, we develop a new capital adequacy buffer model (CABM) which is sensitive to dynamic economic circumstances. The model, which measures additional bank capital required to compensate for fluctuating credit risk, is a novel combination of the Merton structural model which measures...
Persistent link: https://www.econbiz.de/10011255629