Bank Profitability And Risk Taking eBook Download PDF

Download Bank Profitability And Risk Taking full books in PDF, epub, and Kindle. Read online Bank Profitability And Risk Taking ebook anywhere anytime directly on your device. Fast Download speed and no annoying ads. We cannot guarantee that every ebooks is available!

Bank Profitability and Risk-Taking

Author: Natalya Martynova

Publisher: International Monetary Fund

Published: 2015-11-25

Total Pages: 44

ISBN-13: 1513565818

DOWNLOAD EBOOK

Traditional theory suggests that more profitable banks should have lower risk-taking incentives. Then why did many profitable banks choose to invest in untested financial instruments before the crisis, realizing significant losses? We attempt to reconcile theory and evidence. In our setup, banks are endowed with a fixed core business. They take risk by levering up to engage in risky ‘side activities’(such as market-based investments) alongside the core business. A more profitable core business allows a bank to borrow more and take side risks on a larger scale, offsetting lower incentives to take risk of given size. Consequently, more profitable banks may have higher risk-taking incentives. The framework is consistent with cross-sectional patterns of bank risk-taking in the run up to the recent financial crisis.

Book Synopsis Bank Profitability and Risk-Taking by : Natalya Martynova

Download or read book Bank Profitability and Risk-Taking written by Natalya Martynova and published by International Monetary Fund. This book was released on 2015-11-25 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: Traditional theory suggests that more profitable banks should have lower risk-taking incentives. Then why did many profitable banks choose to invest in untested financial instruments before the crisis, realizing significant losses? We attempt to reconcile theory and evidence. In our setup, banks are endowed with a fixed core business. They take risk by levering up to engage in risky ‘side activities’(such as market-based investments) alongside the core business. A more profitable core business allows a bank to borrow more and take side risks on a larger scale, offsetting lower incentives to take risk of given size. Consequently, more profitable banks may have higher risk-taking incentives. The framework is consistent with cross-sectional patterns of bank risk-taking in the run up to the recent financial crisis.

Bank Profitability and Risk-taking

Author: Natalya Martynova

Publisher:

Published: 2015

Total Pages:

ISBN-13: 9781513553733

DOWNLOAD EBOOK

Book Synopsis Bank Profitability and Risk-taking by : Natalya Martynova

Download or read book Bank Profitability and Risk-taking written by Natalya Martynova and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Bank Profitability and Risk Taking in Banks Under Low Interest Rate, Evidence from Banking Sector of Pakistan

Author: Zarmash

Publisher:

Published: 2019

Total Pages: 24

ISBN-13:

DOWNLOAD EBOOK

The aim of the paper is to analyze the effect of low interest rate on profitability and risk-taking in Pakistani banking sector. By applying static modeling approach and using panel data we collected data from 20 Pakistani banks from 2010-2017 time span. The literature gap existed on this topic in under developing countries. We used two different models for Profitability and Risk-Taking. For Profitability we used NIM, Profit, ROA and ROE as performance proxy. We found the existence of negative relation between low interest rate and profitability which means low interest rate has bad effect on the profitability of the banks. While PCL and TCR taken as proxy for Risk-taking. We also found negative association between Short term interest rate and Risk-taking (TCR and PCL) which means that short term interest rate also effect bank risk-taking. Our study is limited to small sample size and few relevant variables. Further study can explore the underlying phenomenon by using large set of data and more sophisticated approach.

Book Synopsis Bank Profitability and Risk Taking in Banks Under Low Interest Rate, Evidence from Banking Sector of Pakistan by : Zarmash

Download or read book Bank Profitability and Risk Taking in Banks Under Low Interest Rate, Evidence from Banking Sector of Pakistan written by Zarmash and published by . This book was released on 2019 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt: The aim of the paper is to analyze the effect of low interest rate on profitability and risk-taking in Pakistani banking sector. By applying static modeling approach and using panel data we collected data from 20 Pakistani banks from 2010-2017 time span. The literature gap existed on this topic in under developing countries. We used two different models for Profitability and Risk-Taking. For Profitability we used NIM, Profit, ROA and ROE as performance proxy. We found the existence of negative relation between low interest rate and profitability which means low interest rate has bad effect on the profitability of the banks. While PCL and TCR taken as proxy for Risk-taking. We also found negative association between Short term interest rate and Risk-taking (TCR and PCL) which means that short term interest rate also effect bank risk-taking. Our study is limited to small sample size and few relevant variables. Further study can explore the underlying phenomenon by using large set of data and more sophisticated approach.

Bank Profitability and Risk-Taking Under Low Interest Rates

Author: Jacob Antoon Bikker

Publisher:

Published: 2017

Total Pages: 41

ISBN-13:

DOWNLOAD EBOOK

The aim of this paper is to investigate the impact of the unusually low interest rate environment on the soundness of the US banking sector in terms of profitability and risk-taking. Using both dynamic and static modeling approaches and various estimation techniques, we find that the low interest rate environment indeed impairs bank performance and compresses net interest margins. Nonetheless, banks have been able to maintain their overall level of profits, due to lower provisioning, which in turn may endanger financial stability. Banks did not compensate for their lower interest income by expanding operations to include trading activities with a higher risk exposure.

Book Synopsis Bank Profitability and Risk-Taking Under Low Interest Rates by : Jacob Antoon Bikker

Download or read book Bank Profitability and Risk-Taking Under Low Interest Rates written by Jacob Antoon Bikker and published by . This book was released on 2017 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: The aim of this paper is to investigate the impact of the unusually low interest rate environment on the soundness of the US banking sector in terms of profitability and risk-taking. Using both dynamic and static modeling approaches and various estimation techniques, we find that the low interest rate environment indeed impairs bank performance and compresses net interest margins. Nonetheless, banks have been able to maintain their overall level of profits, due to lower provisioning, which in turn may endanger financial stability. Banks did not compensate for their lower interest income by expanding operations to include trading activities with a higher risk exposure.

Bank Risk-Taking and Competition Revisited

Author: Mr.Gianni De Nicolo

Publisher: International Monetary Fund

Published: 2006-12-01

Total Pages: 51

ISBN-13: 1451865570

DOWNLOAD EBOOK

This paper studies two new models in which banks face a non-trivial asset allocation decision. The first model (CVH) predicts a negative relationship between banks' risk of failure and concentration, indicating a trade-off between competition and stability. The second model (BDN) predicts a positive relationship, suggesting no such trade-off exists. Both models can predict a negative relationship between concentration and bank loan-to-asset ratios, and a nonmonotonic relationship between bank concentration and profitability. We explore these predictions empirically using a cross-sectional sample of about 2,500 U.S. banks in 2003 and a panel data set of about 2,600 banks in 134 nonindustrialized countries for 1993-2004. In both these samples, we find that banks' probability of failure is positively and significantly related to concentration, loan-to-asset ratios are negatively and significantly related to concentration, and bank profits are positively and significantly related to concentration. Thus, the risk predictions of the CVH model are rejected, those of the BDN model are not, there is no trade-off between bank competition and stability, and bank competition fosters the willingness of banks to lend.

Book Synopsis Bank Risk-Taking and Competition Revisited by : Mr.Gianni De Nicolo

Download or read book Bank Risk-Taking and Competition Revisited written by Mr.Gianni De Nicolo and published by International Monetary Fund. This book was released on 2006-12-01 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper studies two new models in which banks face a non-trivial asset allocation decision. The first model (CVH) predicts a negative relationship between banks' risk of failure and concentration, indicating a trade-off between competition and stability. The second model (BDN) predicts a positive relationship, suggesting no such trade-off exists. Both models can predict a negative relationship between concentration and bank loan-to-asset ratios, and a nonmonotonic relationship between bank concentration and profitability. We explore these predictions empirically using a cross-sectional sample of about 2,500 U.S. banks in 2003 and a panel data set of about 2,600 banks in 134 nonindustrialized countries for 1993-2004. In both these samples, we find that banks' probability of failure is positively and significantly related to concentration, loan-to-asset ratios are negatively and significantly related to concentration, and bank profits are positively and significantly related to concentration. Thus, the risk predictions of the CVH model are rejected, those of the BDN model are not, there is no trade-off between bank competition and stability, and bank competition fosters the willingness of banks to lend.

Bank Profitability and Risk Taking in a Prolonged Environment of Low Interest Rates

Author: Raymond Chaudron

Publisher:

Published: 2016

Total Pages: 0

ISBN-13:

DOWNLOAD EBOOK

Book Synopsis Bank Profitability and Risk Taking in a Prolonged Environment of Low Interest Rates by : Raymond Chaudron

Download or read book Bank Profitability and Risk Taking in a Prolonged Environment of Low Interest Rates written by Raymond Chaudron and published by . This book was released on 2016 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Bank Profitability and Financial Stability

Author: Ms.TengTeng Xu

Publisher: International Monetary Fund

Published: 2019-01-11

Total Pages: 54

ISBN-13: 1484393805

DOWNLOAD EBOOK

We analyze how bank profitability impacts financial stability from both theoretical and empirical perspectives. We first develop a theoretical model of the relationship between bank profitability and financial stability by exploring the role of non-interest income and retail-oriented business models. We then conduct panel regression analysis to examine the empirical determinants of bank risks and profitability, and how the level and the source of bank profitability affect risks for 431 publicly traded banks (U.S., advanced Europe, and GSIBs) from 2004 to 2017. Results reveal that profitability is negatively associated with both a bank’s contribution to systemic risk and its idiosyncratic risk, and an over-reliance on non-interest income, wholesale funding and leverage is associated with higher risks. Low competition is associated with low idiosyncratic risk but a high contribution to systemic risk. Lastly, the problem loans ratio and the cost-to-income ratio are found to be key factors that influence bank profitability. The paper’s findings suggest that policy makers should strive to better understand the source of bank profitability, especially where there is an over-reliance on market-based non-interest income, leverage, and wholesale funding.

Book Synopsis Bank Profitability and Financial Stability by : Ms.TengTeng Xu

Download or read book Bank Profitability and Financial Stability written by Ms.TengTeng Xu and published by International Monetary Fund. This book was released on 2019-01-11 with total page 54 pages. Available in PDF, EPUB and Kindle. Book excerpt: We analyze how bank profitability impacts financial stability from both theoretical and empirical perspectives. We first develop a theoretical model of the relationship between bank profitability and financial stability by exploring the role of non-interest income and retail-oriented business models. We then conduct panel regression analysis to examine the empirical determinants of bank risks and profitability, and how the level and the source of bank profitability affect risks for 431 publicly traded banks (U.S., advanced Europe, and GSIBs) from 2004 to 2017. Results reveal that profitability is negatively associated with both a bank’s contribution to systemic risk and its idiosyncratic risk, and an over-reliance on non-interest income, wholesale funding and leverage is associated with higher risks. Low competition is associated with low idiosyncratic risk but a high contribution to systemic risk. Lastly, the problem loans ratio and the cost-to-income ratio are found to be key factors that influence bank profitability. The paper’s findings suggest that policy makers should strive to better understand the source of bank profitability, especially where there is an over-reliance on market-based non-interest income, leverage, and wholesale funding.

Bank Leverage and Monetary Policy's Risk-Taking Channel

Author: Mr.Giovanni Dell'Ariccia

Publisher: International Monetary Fund

Published: 2013-06-06

Total Pages: 41

ISBN-13: 1484381130

DOWNLOAD EBOOK

We present evidence of a risk-taking channel of monetary policy for the U.S. banking system. We use confidential data on the internal ratings of U.S. banks on loans to businesses over the period 1997 to 2011 from the Federal Reserve’s survey of terms of business lending. We find that ex-ante risk taking by banks (as measured by the risk rating of the bank’s loan portfolio) is negatively associated with increases in short-term policy interest rates. This relationship is less pronounced for banks with relatively low capital or during periods when banks’ capital erodes, such as episodes of financial and economic distress. These results contribute to the ongoing debate on the role of monetary policy in financial stability and suggest that monetary policy has a bearing on the riskiness of banks and financial stability more generally.

Book Synopsis Bank Leverage and Monetary Policy's Risk-Taking Channel by : Mr.Giovanni Dell'Ariccia

Download or read book Bank Leverage and Monetary Policy's Risk-Taking Channel written by Mr.Giovanni Dell'Ariccia and published by International Monetary Fund. This book was released on 2013-06-06 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: We present evidence of a risk-taking channel of monetary policy for the U.S. banking system. We use confidential data on the internal ratings of U.S. banks on loans to businesses over the period 1997 to 2011 from the Federal Reserve’s survey of terms of business lending. We find that ex-ante risk taking by banks (as measured by the risk rating of the bank’s loan portfolio) is negatively associated with increases in short-term policy interest rates. This relationship is less pronounced for banks with relatively low capital or during periods when banks’ capital erodes, such as episodes of financial and economic distress. These results contribute to the ongoing debate on the role of monetary policy in financial stability and suggest that monetary policy has a bearing on the riskiness of banks and financial stability more generally.

Negative Interest Rates, Bank Profitability and Risk-taking

Author: Whelsy Boungou

Publisher:

Published: 2019

Total Pages:

ISBN-13:

DOWNLOAD EBOOK

Book Synopsis Negative Interest Rates, Bank Profitability and Risk-taking by : Whelsy Boungou

Download or read book Negative Interest Rates, Bank Profitability and Risk-taking written by Whelsy Boungou and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Bank Profitability, Leverage Constraints, and Risk-taking

Author: Natalya Martynova

Publisher:

Published: 2019

Total Pages: 0

ISBN-13: 9783957295965

DOWNLOAD EBOOK

Traditional theory suggests that higher bank profitability (or franchise value) dissuades bank risk-taking. We highlight an opposite effect: higher profitability loosens bank borrowing constraints. This enables profitable banks to take risk on a larger scale, inducing risk-taking. This effect is more pronounced when bank leverage constraints are looser, or when new investments can be financed with senior funding (such as repos). The model's predictions are consistent with some notable cross-sectional patterns of bank risk-taking in the run-up to the 2008 crisis

Book Synopsis Bank Profitability, Leverage Constraints, and Risk-taking by : Natalya Martynova

Download or read book Bank Profitability, Leverage Constraints, and Risk-taking written by Natalya Martynova and published by . This book was released on 2019 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Traditional theory suggests that higher bank profitability (or franchise value) dissuades bank risk-taking. We highlight an opposite effect: higher profitability loosens bank borrowing constraints. This enables profitable banks to take risk on a larger scale, inducing risk-taking. This effect is more pronounced when bank leverage constraints are looser, or when new investments can be financed with senior funding (such as repos). The model's predictions are consistent with some notable cross-sectional patterns of bank risk-taking in the run-up to the 2008 crisis