Are financial holding companies' subsidiaries riskier than bank holding companies’ affiliates?

Ly Kim Cuong

International Review of Economics & Finance, 2021, vol. 76, issue C, 1025-1033

Abstract: This paper compares the insolvency risk of financial holding companies' subsidiaries and bank holding companies' subsidiaries in the U.S. The presented findings show that financial holding companies' affiliates tend to engage in more risk-taking behaviour than bank holding companies' affiliates. Our results suggest a diversification discount in the complex structure of the financial holding company at the subsidiary level. The regulator should take into account the increased risk exposure of financial holding companies’ structures to stabilize the banking system.

Keywords: Insolvency risk; Financial holding companies' affiliates; Bank holding companies' affiliates; The U.S (search for similar items in EconPapers)
JEL-codes: G20 G21 G38 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:76:y:2021:i:c:p:1025-1033

DOI: 10.1016/j.iref.2021.07.019

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