Originators, traders, neutrals, and traditioners – various banking business models across the globe. Does the business model matter for financial stability?
MPRA Paper from University Library of Munich, Germany
Why were some banks heavily affected by mortgage crises, while others barely? Why were some banking sectors dominated by “originate and distribute” model, while others were trading? Why did some banks decide not to follow the others, and preferred to stay traditional banks? How the models chosen by banks translated into their risk-return profiles? And finally, which banking model makes the world safer? This article raises these issues. It shows that heterogeneity in the banking industry before the mortgage crisis was huge. We document that institutional factors were largely responsible for the development of individual banking models in single countries. We find that the most risky banking model is when banks specialize in trading and do not diversify. Therefore, the most “optimal” from risk-return profile seems to be the “balanced” model. The traditional model though appears as systemically the least risky, it does not allow banks to achieve sufficient return.
Keywords: Bank risk; business models; bank regulation; financial crisis; banking stability (search for similar items in EconPapers)
JEL-codes: G0 G00 G01 G2 G24 G28 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
https://mpra.ub.uni-muenchen.de/55118/1/MPRA_paper_55118.pdf original version (application/pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:55118
Access Statistics for this paper
More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().