Do Well-Financial Holding Company Organized Banks in Taiwan Take More Risk?

Li-Hua Lai (), Li-Chin Hung and Chau-Jung Kuo ()
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Li-Hua Lai: Department of Risk Management and Insurance, National Kaohsiung First University of Science and Technology, Kaohsiung, Taiwan
Li-Chin Hung: Graduate School of College of Finance and Banking, National Kaohsiung First University of Science and Technology, Kaohsiung, Taiwan
Chau-Jung Kuo: Department of Finance, National Sun Yat-sen University, Kaohsiung, Taiwan

Review of Pacific Basin Financial Markets and Policies (RPBFMP), 2016, vol. 19, issue 04, 1-30

Abstract: This paper employs panel data regression analysis to explore the measurable differences in risk-capitalization relationship between FHC and non-FHC organized Banks. The main contribution of this paper is in explaining some rethinking which shows the business of FHCBs take more risk than that of NFHCBs, and high degree of capitalization is negatively associated with asset risk and has higher interest rate spread increased bank’s asset risk in FHCBs only. It obviously has its strong anti-incentives domination for high capital banks group in NFHCHs, which a high degree of loans ratio, loans ratio is positively associated with asset risk in NFHCBs only. A large degree of bank size, bank size is negatively associated with asset risk in FHCBs only. The prior studies and previous hypothesis indicate that risk level increases when the bank capital size is high but the finding in this paper is inconsistent with the previous research.

Keywords: Financial holdings banks group; risk-weighted assets; capitalization (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (2)

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DOI: 10.1142/S0219091516500247

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