The effect of the trading activities of banks on systemic risk: does banking industry concentration matter?

Eric Fina Kamani (eric.fina.kamani01@univ-poitiers.fr)
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Eric Fina Kamani: CRIEF Poitiers; LEO Orléans; Université de Tours

Economics Bulletin, 2020, vol. 40, issue 1, 542-555

Abstract: In a context where the authorities of the European Banking Union are showing a keen interest in mergers among banks with a view to consolidating the European banking industry, I explore the specific and joint impact of the trading activities of European deposits-taking banks and banking industry concentration on banks' exposure to systemic risk . I find that trading activities increased banks' exposure to systemic risk only in a concentrated banking industry. This paper therefore does not support the encouragement by the European Banking Union authorities for mergers between banks.

Keywords: Trading banks activities; Banking industry concentration; Banks systemic risk exposure (search for similar items in EconPapers)
JEL-codes: G2 L1 (search for similar items in EconPapers)
Date: 2020-02-15
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