Bank risk during the financial crisis: do business models matter?
Simone Manganelli (),
Yener Altunbas () and
David Marques-Ibanez ()
No 1394, Working Paper Series from European Central Bank
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. JEL Classification: G21, G15, E58, G32
Keywords: bank regulation; bank risk; Basle III; business models; financial crisis (search for similar items in EconPapers)
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Working Paper: Bank Risk during the Financial Crisis: Do business models matter? (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20111394
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