Haste Makes Waste: Banking Organization Growth and Operational Risk

W Frame, Ping McLemore and Atanas Mihov

No 2023, Working Papers from Federal Reserve Bank of Dallas

Abstract: This study shows that banking organization growth is associated with higher operational losses per dollar of total assets and incidence of tail risks. Event studies using M&A activity and instrumental variable regressions provide consistent evidence. The relationship between banking organization growth and operational risk varies by loss event types and balance sheet categories. We demonstrate that higher growth predicts worse operational risk realizations during the global financial crisis. These findings have implications for bank performance, risk management and supervision in a continually consolidating banking industry.

Keywords: Banking organizations; Operational risk; Mergers & acquisitions; Growth (search for similar items in EconPapers)
JEL-codes: G20 G21 (search for similar items in EconPapers)
Pages: 54
Date: 2020-08-14
New Economics Papers: this item is included in nep-ban
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:fip:feddwp:88596

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DOI: 10.24149/wp2023

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