Banking business models and the nature of financial crises

Aneta Hryckiewicz and Lukasz Kozlowski

MPRA Paper from University Library of Munich, Germany

Abstract: In our paper we analyze the heterogeneity between various business models among systemically important banks in 65 countries over the period of 2000-2012. For the first time, we are able to identify true banking strategies consisting of different combinations of bank asset and funding sources and assess their impact on the mortgage crisis. We then estimate how distinct strategies have affected bank profitability and risk before the crisis, and what impact they have put on the mortgage crisis. Our results prove that the asset structure of banks was responsible for the systemic risk before the mortgage crisis, whereas the liability structure was responsible for the crisis itself. Finally, we show that countries with banks that rely on investment activities experienced a greater but more short-lived drop in GDP compared to countries that have a predominantly traditional banking sector.

Keywords: Bank risk; business model; bank regulation; financial crisis; banking stability; systemic risk (search for similar items in EconPapers)
JEL-codes: E58 G15 G2 G21 G28 G32 (search for similar items in EconPapers)
Date: 2014-12-11, Revised 2015-03-09
New Economics Papers: this item is included in nep-cfn and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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https://mpra.ub.uni-muenchen.de/64134/1/MPRA_paper_64072.pdf revised version (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:64072

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