Enterprise Risk Management, Risk-Taking, and Macroeconomic Implications: Evidence from Bank Mortgage Loan Management

Shiang Liu () and Jianren Xu ()
Additional contact information
Shiang Liu: University of Wisconsin – La Crosse
Jianren Xu: University of North Texas

Journal of Financial Services Research, 2025, vol. 68, issue 1, No 4, 123-152

Abstract: Abstract We investigate how enterprise risk management (ERM) reshapes firm risk-taking behaviors. Using loan-level data, we find that ERM does not affect bank mortgage loan origination but increases loan sales. To strengthen identification, we employ a staggered difference-in-differences approach in matched samples and instrumental variables. The channel analysis reveals a stronger ERM impact on mortgage sales for high default-risk loans and when macroeconomic risk is greater, suggesting a risk-transfer effect. ERM influences firms by identifying risky business and external risks, thereby altering risk transfer/retention policies. Additionally, banks with ERM incorporate macroeconomic conditions when setting loan loss provisions, reducing credit market procyclicality.

Keywords: Enterprise risk management; Mortgage loan origination; Mortgage loan sales; Macroeconomic implications (search for similar items in EconPapers)
JEL-codes: G21 G30 G32 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s10693-024-00422-0 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:jfsres:v:68:y:2025:i:1:d:10.1007_s10693-024-00422-0

Ordering information: This journal article can be ordered from
http://www.springer.com/journal/10693

DOI: 10.1007/s10693-024-00422-0

Access Statistics for this article

Journal of Financial Services Research is currently edited by Haluk Unal

More articles in Journal of Financial Services Research from Springer, Western Finance Association Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().