Aging gracefully: steering the banking sector through demographic shifts

Christian Schmieder and Patrick Imam ()

No 1193, BIS Working Papers from Bank for International Settlements

Abstract: We analyze how aging populations in might affect the stability of banking systems through changes in the balance sheets and risk preferences of banks over the period 2000-2022. While the anticipated decline in maturity transformation due to aging hints at a possible reduction in risk exposure, an older population may propel banks towards yield-seeking behaviors, offsetting the diminishing prominence of conventional lending operations. Through a comprehensive examination of advanced economies over the past two decades, our findings reveal a general enhancement in bank stability correlating with the aging of populations. However, the adaptive responses of banks to these demographic changes are potentially introducing tail risks. Given the rapid global shift towards aging societies, our analysis highlights the critical need for policymakers to be proactive and vigilant. This is particularly pertinent considering historical precedents where periods of relative stability have often been harbingers of emerging risks.

Keywords: aging; demographics; bank risk-taking; financial stability (search for similar items in EconPapers)
JEL-codes: B26 G01 G21 G28 G32 J11 (search for similar items in EconPapers)
Date: 2024-06
New Economics Papers: this item is included in nep-age, nep-ban and nep-fdg
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Working Paper: Aging Gracefully: Steering the Banking Sector through Demographic Shifts (2024)
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