2019
DOI: 10.1016/j.mulfin.2019.07.001
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Political institutions and foreign banks’ risk-taking in emerging markets

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Cited by 27 publications
(13 citation statements)
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“…The first stream of literature focuses on financial institutions' characteristics, including their size (Saunders et al, 1990;Laeven and Levine, 2009;Afonso et al, 2014), liquidity (Diamond and Dybvig, 2000;Diamond and Rajan, 2012), diversification of funding activities (Demirgüç-Kunt and Huizinga, 2009), bank capital as a share of risk-weighted credit exposures (Furlong and Keely, 1989), and corporate governance (Agoraki et al, 2010;Chen et al, 2017). The second stream of literature focuses on the determinants of risktaking that results from external sources, such the degree of bank competition (Boyd and De Nicolò, 2005;Beck et al, 2006;Beck et al, 2013), monetary policy (Borio and Zhu, 2012;Chen et al, 2017), deposit insurance schemes (Demirgüç-Kunt and Detragiache, 2002;Angkinand and Wihlborg, 2010), external regulation (Barth et al, 2004;Klomp and De Haan, 2012) such as creditor and minority shareholder protection (La Porta et al, 2000;Houston et al, 2010), and political institutions (Chen et al, 2015;Ashraf, 2017;Wang and Sui, 2019).…”
Section: Literature and Hypothesesmentioning
confidence: 99%
“…The first stream of literature focuses on financial institutions' characteristics, including their size (Saunders et al, 1990;Laeven and Levine, 2009;Afonso et al, 2014), liquidity (Diamond and Dybvig, 2000;Diamond and Rajan, 2012), diversification of funding activities (Demirgüç-Kunt and Huizinga, 2009), bank capital as a share of risk-weighted credit exposures (Furlong and Keely, 1989), and corporate governance (Agoraki et al, 2010;Chen et al, 2017). The second stream of literature focuses on the determinants of risktaking that results from external sources, such the degree of bank competition (Boyd and De Nicolò, 2005;Beck et al, 2006;Beck et al, 2013), monetary policy (Borio and Zhu, 2012;Chen et al, 2017), deposit insurance schemes (Demirgüç-Kunt and Detragiache, 2002;Angkinand and Wihlborg, 2010), external regulation (Barth et al, 2004;Klomp and De Haan, 2012) such as creditor and minority shareholder protection (La Porta et al, 2000;Houston et al, 2010), and political institutions (Chen et al, 2015;Ashraf, 2017;Wang and Sui, 2019).…”
Section: Literature and Hypothesesmentioning
confidence: 99%
“…The third control variable is Leverage, which is calculated as bank equity as a share of its total assets (Wu et al , 2017; Wang and Sui, 2019). It has been widely agreed that increased leverage may incur bank instability when central banks implement expansionary monetary policy (Diamond and Rajan, 2012; Vazquez and Federico, 2015).…”
Section: Data and Variablesmentioning
confidence: 99%
“…Next, we control for bank efficiency , measured as the ratio of non-interest operating cost to total income (Chen et al , 2015; Wu et al , 2017; Wang and Sui, 2019). Contradictory results are offered in the literature on the effects of efficiency on bank risks.…”
Section: Data and Variablesmentioning
confidence: 99%
“…More recently, Wang and Sui (2019) studied the effect of political institutions in host economies on the risk-taking behavior of foreign banks in emerging markets. Using a panel of 500 banks across 35 Asian, Central Europe and Latin American economies between 2000 and 2013, they show that democracy of political institutions boosts foreign bank stability.…”
Section: Literature Review: Empiricsmentioning
confidence: 99%