This paper first provides a simple but very general framework for credit portfolio modellingwhich is based on the distinction between systematic and unsystematic risk. Unsystematicor borrower-specific risk vanishes through diversification in a very large, infinitelyfine-grained portfolio. The...

Credit risk associated with interbank lending may lead to domino effects, where the failure of one bank results in the failure of other banks not directly affected by the initial shock. Recent work in economic theory shows that this risk of contagion depends on the precise pattern of interbank...

Key employee life insurance in the banking industry is called bank-owned life insurance (BOLI). Banks use BOLI to provide financial support to help reduce disruptions due to the death of a key executive and as a part of the executive compensation package. We investigate the characteristics of...

The article analyses the link between Italian life insurers' profitability and bank affiliation. It also examines the influence that the differences in product mix and distribution costs displayed by bank affiliated versus traditional insurers has on results, and the changes that the big...

I find that life insurers with bank affiliates had higher premium growth rates than did other life insurers in 2008. The higher growth is derived mainly from annuity products (deposit-type insurance products), which are often viewed as substitutes for bank certificates of deposit (CDs). The...

The use of bank-owned life insurance (BOLI) has more than tripled since 2001 and has caught the attention of the Office of the Comptroller of the Currency. We find increases in BOLI lead to higher levels of liquidity risk, credit risk, and interest rate risk. Robustness tests confirm these...

Bank-owned life insurance (BOLI) is life insurance purchased by bank holding companies (BHCs) for key employees, whose proceeds can be shared by the company and employees' heirs. We investigate whether and how executive compensation affects BOLI and whether BOLI use affects BHC performance....

We address the paradox that financial innovations aimed at risk-sharing appear to have made the world riskier. Financial innovations facilitate hedging idiosyncratic risks among agents; however, aggregate risks can be hedged only with liquid assets. When risk-sharing is primitive, agents...

This study was conducted to investigate the determinants of bank's stability in an emerging country. Data were collected from the commercial banks listed on Vietnam's Stock Exchanges over the years from 2010 to 2018. Further, the generalized method of moments (GMM) regression technique to...