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Bank Risk during the Financial Crisis: Do business models matter?

Yener Altunbas (), Simone Manganelli () and David Marques-Ibanez ()

No 12003, Working Papers from Bangor Business School, Prifysgol Bangor University (Cymru / Wales)

Abstract: We exploit the 2007-2009 financial crisis to analyze how risk relates to bank business models. Institutions with higher risk exposure had less capital, larger size, greater reliance on short-term market funding, and aggressive credit growth. Business models related to significantly reduced bank risk were characterized by a strong deposit base and greater income diversification. The effect of business models is non-linear: it has a different impact on riskier banks. Finally, it is difficult to establish in real time whether greater stock market capitalization involves real value creation or the accumulation of latent risk.

Keywords: bank risk; business models; bank regulation; financial crisis; Basle III (search for similar items in EconPapers)
JEL-codes: G21 G15 E58 G32 (search for similar items in EconPapers)
Date: 2012-02
New Economics Papers: this item is included in nep-ban, nep-cba, nep-fmk and nep-rmg
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Working Paper: Bank risk during the financial crisis: do business models matter? (2011) Downloads
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