Bank Loan Supply During Crises: The Importance of Geographic Diversification

Doerr, Sebastian; Schaz, Philipp

doi:10.2139/ssrn.3082945

Cited by 3 publications

(2 citation statements)

References 78 publications

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“…Following the diversification hypothesis, issuing explicit and quantifiable guidelines for asset diversification, which includes prescribing limits on loans to individual borrowers as well as on geographical and sectoral exposures, is supposed to result in more stable (large) banks (Houston et al, 2010;Doerr and Schaz, 2019). Consequently, this regulatory measure should weaken the link between bank size and volatility (θ 1 < 0).…”

Section: Hypotheses About the Effects Of Regulations On The Size-volamentioning

confidence: 99%

The Nexus between Loan Portfolio Size and Volatility: Does Banking Regulation Matter?

Bremus

Ludolph

2019

SSRN Journal

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Since the global financial crisis and the related restructuring of banking systems, bank concentration is on the rise in many countries. Consequently, bank size and its role for macroeconomic volatility (or: stability) is the subject of intense debate. This paper analyzes the effects of financial regulations on the link between bank size, as measured by the volume of the loan portfolio, and volatility. Using bank-level data for 1999 to 2014, we estimate a power law that relates bank size to the volatility of loan growth. The effect of regulation on the power law coefficient indicates whether regulation weakens or strengthens the size-volatility nexus. Our analysis reveals that more stringent capital regulation and the introduction of bank levies weaken the size-volatility nexus; in countries with more stringent capital regulation or levies in place, large banks show, ceteris paribus, lower loan portfolio volatility. Moreover, we find weak evidence that diversification guidelines weaken the link between size and volatility.

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Section: Hypotheses About the Effects Of Regulations On The Size-volamentioning

confidence: 99%

The Nexus between Loan Portfolio Size and Volatility: Does Banking Regulation Matter?

Bremus

Ludolph

2019

SSRN Journal

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“…Diversification of bank risks and activity helps attract investment [12][13][14][15][16] and reduces the impact on interconnected markets [17]. Previous studies of Chinese banks have shown that geographic diversification of banks increases market share, net margin, and non-interest income, as well as increasing operating costs through expansion [18].…”

Section: Introductionmentioning

confidence: 99%

Risks of Banking Services’ Digitalization: The Practice of Diversification and Sustainable Development Goals

Aguayo

Ślusarczyk

2020

Sustainability

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The study aims to investigate threats that might occur in diversification management, operational risks of banking services in the process of digitalization, as well as the impact on customers and banks. The right choice of a risk management model for a bank plays an important role in the sustainable development of competitiveness and the transformation of banking activities in the future. This work assesses bank risks and determines information risks in relation to the total capital of Santander Bank of Spain. The authors adapted an operational risk management (ORM) model to minimize the risks of the bank’s digitalization and upcoming operational risks. The ratio of the total operational risk to the total bank’s capital was 0.65%, which is below the permissible minimum value and is acceptable. Based on this indicator, diversification of business risks can be applied. As a result of the study, the total value of operational risks was calculated and the acceptability of this indicator to the capital of Santander Bank was assessed, which allowed the authors to assess whether the value was critical. In addition, it was also revealed that the main external risk of Santander Bank in 2018 was fraud in the use of online payments. The results might help to more effectively evaluate insurance payments for identified operational risks and effectively make decisions and optimize reporting documents of banks.

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The Real Effects of Financial Protectionism

Schaz

2019

SSRN Journal

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Bank Loan Supply During Crises: The Importance of Geographic Diversification

Cited by 3 publications

References 78 publications

The Nexus between Loan Portfolio Size and Volatility: Does Banking Regulation Matter?

The Nexus between Loan Portfolio Size and Volatility: Does Banking Regulation Matter?

Risks of Banking Services’ Digitalization: The Practice of Diversification and Sustainable Development Goals

The Real Effects of Financial Protectionism

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