There is empirical evidence that specialization in lending leads on average to lower loan loss provisions and a higher profitability. In this paper we examine whether a better monitoring quality and/or lending to industries with lower loss rates are able to explain these results.The main results...

Over the last couple of years the banking industry has seen a remarkable trend towards concentration. The aim of this study is to examine this tendency and its consequences for the German market. We analyze commercial lending in Germany from 1970 to 2003 for all banks active on the German...

Regulation requires banks to hold sufficent capital to cover their risks. Within the new framework commonly labeled Basel II, the Internal Ratings Based Approach (IRBA) allows banks to use their own rating systems to determine how much capital they must set aside for their credit risk. These...

Banks face a tradeoff between diversifying and focusing their loan portfolio. In this paper we carry out an empirical study for the German market to shed light on the question whether or not the benefits of risk sharing outweigh those of specialization. We use data from the Bundesbank's...

The paper deals with two particular investment decisions: optimizing the investment date and opitmizing a single identical replacement. The objective is to maximize the net present value. For the common and convenient assumption of a flat term structure of inetrest rates, two results are known....