This paper provides a critical analysis of the subadditivity axiom, which is the key condition for coherent risk measures. Contrary to the subadditivity assumption, bank mergers can create extra risk. We begin with an analysis how a merger affects depositors, junior or senior bank creditors, and...

We bring to bear a hand-collected dataset of executive turnovers in U.S. banks to test the efficacy of market discipline in a 'laboratory setting' by analyzing banks that are less likely to be subject to government support. Specifically, we focus on a new face of market discipline: stakeholders'...

Traditional bank competition policy seeks to balance efficiency with incentives to take risk. The main tools are rules guiding entry/exit and consolidation of banks. This paper seeks to refine this view in light of recent changes to financial services provision. Modern banking is largely...

This paper examines the impact of mergers on default risk, finding that, on average, a merger increases the default risk of the acquiring firm. This is surprising for two reasons: risk reduction is among the reasons commonly cited for mergers, and asset diversification should reduce default risk...

Using a combination of propensity score matching and difference-in-difference techniques we investigate the impact of foreign bank ownership on the performance and market power of acquired banks operating in Central and Eastern Europe. This approach allows us to control for selection bias as...

ENGLISH ABSTRACT: The research report investigates the risk/return relationship in the primary agricultural sector in theWestern Cape from a commercial bank's perspective. The study investigated the correlationbetween credit risk and return within a randomly selected portfolio of agricultural...

The previous political dispensation limited black people’s participation in the SouthAfrican economy. Poor credit records, lack of training, resulting in skills and capacitygaps further limited entry into the lending market. These aspects are considered themain limitations in obtaining finance...

The concept of risk-based capital requirements enjoys widespread support. Effective implementation, however, requires that risk be measured accurately both across borrowers and across time. Under the New Capital Accord, the cornerstone of this risk measurement process is the rating of the...

This article summarizes a conference, titled “Issues Related to Central Counterparty Clearing,” cosponsored by the Federal Reserve Bank of Chicago and the European Central Bank on April 3–4, 2006. The conference brought together industry executives, policymakers, and research economists to...

Remarks at the Center for Transnational Legal Studies Seminar on the Impact of U.S. Regulatory Reform on Global Banks, New York City.