Banking Risks around the World : The Implicit Safety Net Subsidy Approach
The author calculates gross safety net
subsidies for a large sample of banks in 12 countries, to
assess the relationship between the risk-taking behavior of
banks, and certain ban characteristics. He finds that gross
safety net subsidies are higher for banks that have
concentrated ownership, that are affiliated with a business
group, that are small, or that have high credit growth, and
for banks in countries with low GDP per capita, high
inflation, or poor quality, and enforcement of the legal
system. These findings suggest that the moral hazard
behavior of a bank depends on its institutional environment,
and its corporate governance structure. The author also
presents a matrix that shows estimates of safety net
subsidies for a range of given combinations of equity
volatilities, and equity-to-deposit ratios. These figures
could be used as input to an early warning system, for both
individual, and systemic banking problems.
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Bibliographic Details
Main Author: |
Laeven, Luc |
Language: | English en_US |
Published: |
World Bank, Washington, DC
2000-11
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Subjects: | ACCOUNTING,
BANK ASSETS,
BANK FAILURE,
BANK MONITORING,
BANK OF KOREA,
BANK RESTRUCTURING,
BANK RISK,
BANK RISK TAKING,
BANK RUNS,
BANKING CRISES,
BANKING CRISIS,
BANKING RISKS,
BANKING SECTOR,
BANKING SYSTEM,
BANKING SYSTEMS,
BANKS,
CAPITALIZATION,
COMMERCIAL BANKS,
COMMON STOCK,
CONTAGION,
CORPORATE GOVERNANCE,
DEBT,
DEPOSIT INSURANCE,
DEPOSIT INSURANCE PREMIUMS,
DEPOSIT INSURANCE PRICING,
DEPOSIT INSURANCE SCHEMES,
DEPOSITORS,
DEPOSITS,
DIVIDEND YIELD,
DIVIDENDS,
EARLY WARNING SYSTEM,
ECONOMICS,
EMPIRICAL ANALYSIS,
EMPIRICAL EVIDENCE,
EMPIRICAL STUDIES,
FACE VALUE,
FINANCIAL CRISIS,
FINANCIAL DISTRESS,
FINANCIAL INSTITUTIONS,
FINANCIAL STRUCTURE,
FOREIGN EXCHANGE,
GOVERNMENT INTERVENTION,
INFLATION,
INFLATION RATES,
INSTITUTIONAL ENVIRONMENT,
INSURANCE PREMIUMS,
INSURED DEPOSITS,
LAWS,
LEGAL SYSTEMS,
LIQUIDITY,
MARKET DISCIPLINE,
MARKET VALUE,
MORAL HAZARD,
REGIONAL BANKS,
REGRESSION MODELS,
REGULATORY FORBEARANCE,
RETURN ON ASSETS,
RISK TAKING,
SAFETY,
SHAREHOLDING,
SMALL BANKS,
STATE OWNERSHIP,
SUBSIDIARY,
TRADING,
VOLATILITY, |
Online Access: | http://documents.worldbank.org/curated/en/2000/11/717436/banking-risks-around-world-implicit-safety-net-subsidy-approach
https://hdl.handle.net/10986/19744
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