Bank Profitability and Risk-Taking ePub (Adobe DRM) download by Natalya Martynova

Bank Profitability and Risk-Taking

INTERNATIONAL MONETARY FUND
Publication date: November 2015
ISBN: 9781513565811
Digital Book format: ePub (Adobe DRM)

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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.
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Bank Profitability and Risk-Taking ePub (Adobe DRM) download by Natalya Martynova
INTERNATIONAL MONETARY FUND, November 2015
ISBN: 9781513565811
EAN:  9781513565811
ePub (Adobe DRM)
List Price: $4.50 eBook price: $3.99
Bank Profitability and Risk-Taking PDF (Adobe DRM) download by Natalya Martynova
INTERNATIONAL MONETARY FUND, November 2015
ISBN: 9781513509471
EAN:  9781513509471
PDF (Adobe DRM)
List Price: $9.00 eBook price: $6.99