Conventional wisdom in banking argues that diversification tends to reduce bank risk and improve performance, but the … recent financial crisis suggests that aggressive diversification strategies may have resulted in increased risk taking and … poor performance. This paper addresses this important question by evaluating the empirical relationship between …

relation between loan risk and collateral. Specifically, we posit that different economic characteristics or types of … collateral pledges may be associated with the empirical dominance of the four different risk-collateral channels implied by … economic theory. For our sample, collateral overall is associated with lower loan risk premiums and a higher probability of ex …

borrower risk, loan contract terms, and ex post performance for both secured and unsecured loans. The results suggest that the … private information about borrower risk that is unobserved by the lender. The data also include public information about …

Liquidity creation is one of banks' raisons d'être. But what happens to liquidity creation and risk taking when a bank … increases to up to around 50 percent when such actions are taken. Second, bank risk taking decreases in the aftermath of … following such disciplinary measures, they also reduce their risk exposure over this period to become safer banks. …

, whereas similar educational backgrounds reduce the chance that the appointee comes from outside. When we examine performance …