The effect of non-traditional banking activities on systemic risk: Does bank size matter?

Eric Fina Kamani

Finance Research Letters, 2019, vol. 30, issue C, 297-305

Abstract: This article analyses how the effects of non-traditional banking activities on banks’ exposures to systemic risk differ according to bank size. Through data on European banks, we use the generalized-method-of-moments while taking into account the unobservable common factors between banks. We find that non-traditional banking activities only increase small banks’ exposure to systemic risk; trading activities only increase small banks’ exposure to systemic risk; commissions and fees activities only increase large banks’ exposure to systemic risk. Thus, our findings call for the establishment of a European banking regulation similar to the Glass-Steagall Act for small banks.

Keywords: Non-interest income; Bank size; Systemic risk (search for similar items in EconPapers)
JEL-codes: G21 G28 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:30:y:2019:i:c:p:297-305

DOI: 10.1016/j.frl.2018.10.013

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