Bank Size, Capital, and Systemic Risk: Some International Evidence

Laeven, Luc; Ratnovski, Lev; Tong, Hui

doi:10.2139/ssrn.2508910

Cited by 111 publications

(162 citation statements)

References 31 publications

Supporting

Mentioning

135

Contrasting

Unclassified

Order By: Relevance

“…Institutional share is the portion of ownership of the firm that is held by non-bank institutions which keep the diverse impact on investment decision, information production, and firm policies (Gillan and Starks 2000) Accounting experts are those on the board who play an accounting watchdog role by focusing on supervision, transparency and accountability of recording and reporting of financial data (Kassinis and Vafeas 2002;Masud et al 2019) Legal experts (LE) Law experts are expert board members with a law background, concentrate on legal guidance on financial and nonfinancial deeds with external, resolving legal issues (Masud et al 2019) Controlled factors Bank size (SIZE) The natural logarithm of bank assets is termed as bank size that ensures prospective scale economies (Laeven et al 2016) Age of Banks (AGE)…”

Section: Appendix 1: Definition Of Selected Variablesmentioning

confidence: 99%

Corporate governance and banks’ productivity: evidence from the banking industry in Bangladesh

Rashid

Zobair

Chowdhury

et al. 2020

Bus Res

View full text Add to dashboard Cite

Though remarkable literature exploring productivity and efficiency has emerged since the last half of the previous century, but dearth studies have been found in showing the impact of corporate governance on banks' productivity. The study aims to investigate the banks' productivity and its relationship with corporate governance. For this purpose, the study examines the productivity of 30 listed banks of Bangladesh deploying a Malmquist Productivity Index (an extension of Data Envelopment Analysis) with a panel data covering the period of five years from 2013 to 2017. The empirical results show that the average productivity of the banks is 1.03%. Finally, the ordinary least square (OLS), fixed effect (FE), and random effect (RE) regression were run separately. The research outcomes show that the productivity of the Bangladeshi banks is significantly influenced by financial performance, ownership structure, and board characteristics. The study provides the researchers, academicians, management of the banks, and regulatory body a new insight of how corporate governance influences the banks' productivity so that they can formulate a better policy to generate more productivity.

show abstract

Section: Appendix 1: Definition Of Selected Variablesmentioning

confidence: 99%

Corporate governance and banks’ productivity: evidence from the banking industry in Bangladesh

Rashid

Zobair

Chowdhury

et al. 2020

Bus Res

View full text Add to dashboard Cite

show abstract

“…We also assess whether the business model of banks drives our measure of systemic risk. Like those of Brunnermeier et al (2012) and Laeven et al (2016), our results suggest that banks specialising in market-based activities tend to have a higher level of systemic risk than do banks specialising in traditional intermediation activities. Furthermore, we investigate the link between the profitability of banks, proxied by the return on equity, and their contribution to systemic risk.…”

Section: Introductionmentioning

confidence: 59%

Measuring network systemic risk contributions: A leave-one-out approach

Hué

Lucotte

Tokpavi

2019

Journal of Economic Dynamics and Control

View full text Add to dashboard Cite

Granger-causality measures of interconnectedness between financial institutions are useful indicators of systemic risk, as they help in evaluating how far the distress of one institution is disseminated across the whole of the financial system through networks. This article provides a critical assessment of Granger-causality networks, showing that they can lead to inconsistent measures of systemic risk contributions because of the presence of spurious causalities arising from indirect contagion effects. The traditional solutions for controlling for these effects using inference on conditional Granger-causality lead to the curse of dimensionality though. To solve this, we provide a measure of financial network systemic risk contributions that is based on the leave-one-out (LOO) concept. For a given financial institution, the new measure evaluates how far the total number of significant Granger-causalities breaks down when this institution is excluded from the system. We control for spurious causalities between the remaining institutions due to the indirect contagion effect of the excluded financial institution using a conditional Granger-causality test, which is free of the curse of dimensionality. Empirical applications are conducted using daily market returns for a sample of the world's largest banks. The results show that our measure gives a meaningful ranking of the systemic importance of financial institutions that is consistent with the ranking of global systemically important banks (G-SIBs) provided by the Financial Stability Board (FSB). Moreover, our measure is shown to be a robust and significant early-warning indicator of large losses from a systemic event, and is strongly driven by balance-sheet variables related to size, business model and profitability.JEL Codes: G12, G29, C51

show abstract

“…The concentration-stability hypothesis states that the higher the concentration, the more the bank stability, because size enhances better diversification that mitigates risks and allows banks to improve their activities with less capital and less stable funding. In addition, the larger banks enjoy a comparative advantage in market-based activities (see Laeven et al (2014)). Similarly, Boyd et al (2004) concluded that larger banks increases profits and mitigates financial fragility in concentrated banking system by providing huge capital protection against external macroeconomic and liquidity shocks.…”

Section: Bank Concentration and Banking Stabilitymentioning

confidence: 99%

“…To Mishkin (1999) a rise in bank size aggravates the moral hazard puzzle for the manager whose belief is focus of receiving government support( in form of central banks" bail out to financially distressed large banks). Therefore, larger banks relies on the bailout subsidies in case of bank distress (Laeven et al, 2014). In addition, owing to the possession of market power in the hand of larger banks, they place higher loan interest that force borrowers to carry out risky projects in order to meet the mandate of the loan payment, and thus this may increase default risks.…”

Section: Bank Concentration and Banking Stabilitymentioning

confidence: 99%

Untitled

2017

International Journal of Business, Economics and Management

View full text Add to dashboard Cite

Article HistoryThe study investigated the drivers of banking stability in ECOWAS countries. The results show that the stability in the banking sector is mainly influenced by the banking spread (Net Interest Margin-NIM). However, it finds that crises in the banking sector pose a negative influence on stability. In addition, the result reveals that high percentage of foreign banks reduces stability in the banking industry. The impact of income diversification has a positive influence on stability even though the effect is weak. Similarly, the impact of more concentrated banking industry on stability is positive but insignificant.

show abstract

Bank Size, Capital, and Systemic Risk: Some International Evidence

Cited by 111 publications

References 31 publications

Corporate governance and banks’ productivity: evidence from the banking industry in Bangladesh

Corporate governance and banks’ productivity: evidence from the banking industry in Bangladesh

Measuring network systemic risk contributions: A leave-one-out approach

Untitled

Contact Info

Product

Resources

About