314 research outputs found
Survival of the Fittest: Contagion as a Determinant of Canadian and Australian Bank Risk
Investment Opportunity Set, Product Mix, and the Relationship between Bank CEO Compensation and Risk-Taking
To Separate or Not to Separate Investment from Commercial Banking? An Empirical Analysis of Attention Distortion Under Multiple Tasks
The Nature of Financial and Real Business Cycles: The Great Moderation and Banking Sector Pro-Cyclicality
Determinants of Banking System Fragility: A Regional Perspective
Abstract: Banking systems are fragile not only within one country but also within and across regions. We study the role of regional banking system characteristics for regional banking system fragility. We find that regional banking system fragility reduces when banks in the region jointly hold more liquid assets, are better capitalized, and when regional banking systems are more competitive. For Asia and Latin-America, a greater presence of foreign banks also reduces regional banking fragility. We further investigate the possibility of contagion within and across regions. Within region banking contagion is important in all regions but it is substantially lower in the developed regions compared to emerging market regions. For cross-regional contagion, we find that the contagion effects of Europe and the US on Asia and Latin America are significantly higher compared to the effect of Asia and Latin America among themselves. Finally, the impact of cross-regional contagion is attenuated when the host region has a more liquid and more capitalized banking sector.
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