Buch, Claudia M., DeLong, Gayle and Neugebauer, Katja (2007) International banking and the allocation of risk. IAW-Diskussionspapiere (32). InstItut für Angewandte WIrtschaftsforschung, Tübingen, Germany.
Full text not available from this repository.Abstract
Macroeconomic risks could magnify individual bank risk. Mitigating the influence of economy-wide risks on banks could therefore be very important to maintain a smooth-running banking system. In this paper, we explore the extent to which macroeconomic risks affect banks. We use a bank-level dataset on over 2,000 banks worldwide for the years 1995-2002 to study the effect of macroeconomic volatility, the openness of the banking system, and banking regulations on bank risks. Our measure of bank risk is the volatility of banks’ pretax profits. We find that macroeconomic volatility increases banks’ profit volatility and that international openness of the banking system lowers bank risk. We find no impact of banking regulation on profit volatility. Our findings suggest that if policymakers want to lower bank risk, they should seek to lower macroeconomic volatility as well as increase openness in the banking system.
| Item Type: | Monograph (Discussion Paper) |
|---|---|
| Official URL: | http://www.iaw.edu |
| Additional Information: | © 2007 IAW |
| Divisions: | Systemic Risk Centre |
| Subjects: | H Social Sciences > HC Economic History and Conditions |
| JEL classification: | E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Employment, and Investment > E21 - Macroeconomics: Consumption; Saving; Aggregate Physical and Financial Consumer Wealth E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E52 - Monetary Policy (Targets, Instruments, and Effects) |
| Date Deposited: | 10 Jun 2014 16:35 |
| Last Modified: | 13 Sep 2024 20:06 |
| URI: | http://eprints.lse.ac.uk/id/eprint/57026 |
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