Operational Risk and Risk Management Quality: Evidence from U.S. Bank Holding Companies

Azamat Abdymomunov () and Atanas Mihov ()
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Azamat Abdymomunov: Federal Reserve Bank of Richmond
Atanas Mihov: Federal Reserve Bank of Richmond

Journal of Financial Services Research, 2019, vol. 56, issue 1, No 3, 73-93

Abstract: Abstract This study documents the association between the quality of risk management practices and operational losses at large U.S. financial institutions. Using detailed supervisory data, we find that companies with weak risk management practices experience higher and more volatile operational losses. We also present evidence that the strength of risk management practices prior to the 2008–2009 Financial Crisis has explanatory power over losses during the crisis period. Our analysis provides new evidence of the importance of risk management practices for curtailing risk at financial institutions.

Keywords: Financial institutions; Operational risk; Risk management; Financial crisis (search for similar items in EconPapers)
JEL-codes: G20 G21 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (8)

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DOI: 10.1007/s10693-017-0284-3

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