Bank Complexity and Risk

Elizaveta Kamaraeva ()
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Elizaveta Kamaraeva: International College of Economics and Finance, National Research University Higher School of Economics

Russian Journal of Money and Finance, 2020, vol. 79, issue 3, 75-104

Abstract: The consolidation of banks into banking groups and holdings has been a prominent recent trend in Russia's banking sector. To evaluate the effect of consolidation on the risk of a banking group, one needs a specific metric that captures organisational, business, and geographic complexity. In this paper, I consider different complexity types and proxies, and examine how complexity affects the risk of a banking group. Using data for 76 banking groups in Russia for 2015-2019, I find that for most of the complexity indicators there is a positive relationship between the organisational and business complexity on the one hand, and the risk of a banking group on the other hand. I also show that, in combination, different types of complexity have a positive effect on risk.

Keywords: bank complexity; risk taking; regulation; banking group; agency problem; diversification; Z-score (search for similar items in EconPapers)
JEL-codes: G21 G32 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:bkr:journl:v:79:y:2020:i:3:p:75-104

DOI: 10.31477/rjmf.202003.75

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