Share

Bank Competition, Risk Taking, and their Consequences: Evidence from the U.S. Mortgage and Labor Markets

2018-07-06 Business & Economics
Download Bank Competition, Risk Taking, and their Consequences: Evidence from the U.S. Mortgage and Labor Markets PDF Online Free

Author :
Release : 2018-07-06
Genre : Business & Economics
Kind : eBook
Book Rating : 037/5 ( reviews)

GET EBOOK


Book Synopsis Bank Competition, Risk Taking, and their Consequences: Evidence from the U.S. Mortgage and Labor Markets by : Alan Xiaochen Feng

Download or read book Bank Competition, Risk Taking, and their Consequences: Evidence from the U.S. Mortgage and Labor Markets written by Alan Xiaochen Feng. This book was released on 2018-07-06. Available in PDF, EPUB and Kindle. Book excerpt: Bank competition can induce excessive risk taking due to risk shifting. This paper tests this hypothesis using micro-level U.S. mortgage data by exploiting the exogenous variation in local house price volatility. The paper finds that, in response to high expected house price volatility, banks in U.S. counties with a competitive mortgage market lowered lending standards by twice as much as those with concentrated markets between 2000 and 2005. Such risk taking pattern was associated with real economic outcomes during the financial crisis, including higher unemployment rates in local real sectors.

Bank Risk-Taking and Competition Revisited

2006-12-01 Business & Economics
Download Bank Risk-Taking and Competition Revisited PDF Online Free

Author :
Release : 2006-12-01
Genre : Business & Economics
Kind : eBook
Book Rating : 570/5 ( reviews)

GET EBOOK


Book Synopsis Bank Risk-Taking and Competition Revisited by : Mr.Gianni De Nicolo

Download or read book Bank Risk-Taking and Competition Revisited written by Mr.Gianni De Nicolo. This book was released on 2006-12-01. Available in PDF, EPUB and Kindle. Book excerpt: This paper studies two new models in which banks face a non-trivial asset allocation decision. The first model (CVH) predicts a negative relationship between banks' risk of failure and concentration, indicating a trade-off between competition and stability. The second model (BDN) predicts a positive relationship, suggesting no such trade-off exists. Both models can predict a negative relationship between concentration and bank loan-to-asset ratios, and a nonmonotonic relationship between bank concentration and profitability. We explore these predictions empirically using a cross-sectional sample of about 2,500 U.S. banks in 2003 and a panel data set of about 2,600 banks in 134 nonindustrialized countries for 1993-2004. In both these samples, we find that banks' probability of failure is positively and significantly related to concentration, loan-to-asset ratios are negatively and significantly related to concentration, and bank profits are positively and significantly related to concentration. Thus, the risk predictions of the CVH model are rejected, those of the BDN model are not, there is no trade-off between bank competition and stability, and bank competition fosters the willingness of banks to lend.

Bank Leverage and Monetary Policy's Risk-Taking Channel

2013-06-06 Business & Economics
Download Bank Leverage and Monetary Policy's Risk-Taking Channel PDF Online Free

Author :
Release : 2013-06-06
Genre : Business & Economics
Kind : eBook
Book Rating : 130/5 ( reviews)

GET EBOOK


Book Synopsis Bank Leverage and Monetary Policy's Risk-Taking Channel by : Mr.Giovanni Dell'Ariccia

Download or read book Bank Leverage and Monetary Policy's Risk-Taking Channel written by Mr.Giovanni Dell'Ariccia. This book was released on 2013-06-06. Available in PDF, EPUB and Kindle. Book excerpt: We present evidence of a risk-taking channel of monetary policy for the U.S. banking system. We use confidential data on the internal ratings of U.S. banks on loans to businesses over the period 1997 to 2011 from the Federal Reserve’s survey of terms of business lending. We find that ex-ante risk taking by banks (as measured by the risk rating of the bank’s loan portfolio) is negatively associated with increases in short-term policy interest rates. This relationship is less pronounced for banks with relatively low capital or during periods when banks’ capital erodes, such as episodes of financial and economic distress. These results contribute to the ongoing debate on the role of monetary policy in financial stability and suggest that monetary policy has a bearing on the riskiness of banks and financial stability more generally.

Bank Risk-Taking and Competition Revisited

2003-06-01 Business & Economics
Download Bank Risk-Taking and Competition Revisited PDF Online Free

Author :
Release : 2003-06-01
Genre : Business & Economics
Kind : eBook
Book Rating : 815/5 ( reviews)

GET EBOOK


Book Synopsis Bank Risk-Taking and Competition Revisited by : Mr.Gianni De Nicolo

Download or read book Bank Risk-Taking and Competition Revisited written by Mr.Gianni De Nicolo. This book was released on 2003-06-01. Available in PDF, EPUB and Kindle. Book excerpt: This study reinvestigates the theoretical relationship between competition in banking and banks' exposure to risk of failure. There is a large existing literature that concludes that when banks are confronted with increased competition, they rationally choose more risky portfolios. We briefly review this literature and argue that it has had a significant influence on regulators and central bankers, causing them to take a less favorable view of competition and encouraging anti-competitive consolidation as a response to banking instability. We then show that existing theoretical analyses of this topic are fragile, since they do not detect two fundamental risk-incentive mechanisms that operate in exactly the opposite direction, causing banks to aquire more risk per portfolios as their markets become more concentrated. We argue that these mechanisms should be essential ingredients of models of bank competition.

Bank Competition, Risk and Asset Allocations

2009-07 Business & Economics
Download Bank Competition, Risk and Asset Allocations PDF Online Free

Author :
Release : 2009-07
Genre : Business & Economics
Kind : eBook
Book Rating : /5 ( reviews)

GET EBOOK


Book Synopsis Bank Competition, Risk and Asset Allocations by : Gianni De Nicoló

Download or read book Bank Competition, Risk and Asset Allocations written by Gianni De Nicoló. This book was released on 2009-07. Available in PDF, EPUB and Kindle. Book excerpt: We study a banking model in which banks invest in a riskless asset and compete in both deposit and risky loan markets. The model predicts that as competition increases, both loans and assets increase; however, the effect on the loans-to-assets ratio is ambiguous. Similarly, as competition increases, the probability of bank failure can either increase or decrease. We explore these predictions empirically using a cross-sectional sample of 2,500 U.S. banks in 2003, and a panel data set of about 2600 banks in 134 non-industrialized countries for the period 1993-2004. With both samples, we find that banks' probability of failure is negatively and significantly related to measures of competition, and that the loan-to-asset ratio is positively and significantly related to measures of competition. Furthermore, several loan loss measures commonly employed in the literature are negatively and significantly related to measures of bank competition. Thus, there is no evidence of a trade-off between bank competition and stability, and bank competition seems to foster banks' willingness to lend.

You may also like...