Regulatory and Institutional Determinants of Credit Risk Taking and a Bank's Default in Emerging Market Economies

Christophe Godlewski

Journal of Emerging Market Finance, 2006, vol. 5, issue 2, 183-206

Abstract: Regulatory and institutional environment is not without effect on a bank's risk taking and therefore on a bank's default. In this article, we investigate regulatory and institutional determinants of credit risk taking and bank's default probability in emerging market economies. Using a two step logit model applied to a database of banks from emerging economies, we confirm the role of the institutional and regulatory environment as a source of excess credit risk, which increases a bank's default risk. In particular, the rule of law appears to be a crucial element of an efficient regulatory environment, which may reduce excessive risk taking incentives.

Keywords: JEL Classification: C35; JEL Classification: G21; JEL Classification: G28; Regulatory and institutional determinants; bank's default; credit risk; emerging market economies; two step logit model (search for similar items in EconPapers)
Date: 2006
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/097265270600500204 (text/html)

Related works:
Working Paper: Regulatory and Institutional Determinants of Credit Risk Taking and a Bank's Default in Emerging Market Economies (2006)
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:sae:emffin:v:5:y:2006:i:2:p:183-206

DOI: 10.1177/097265270600500204

Access Statistics for this article

More articles in Journal of Emerging Market Finance from Institute for Financial Management and Research
Bibliographic data for series maintained by SAGE Publications ().