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Efficiency and Risk-Taking in European Banking


Franco Fiordelisi


University of Rome III, Italy; Washington University, Saint Louis - Olin Business School

David Marques-Ibanez


European Central Bank (ECB)

Philip Molyneux


Bangor University, Bangor Business School
December 1, 2009


Abstract:     
The recent period of crisis in credit markets has highlighted the crucial role of bank risk taking. Our paper assesses the inter-temporal relationships among bank efficiency, capital and bank risk-taking in the EU-26 commercial banking industry between 1995 and 2007. Our results support the bad management-, luck-, cost and revenue skimping hypotheses. Overall, our paper provides evidence that higher performance (enhanced efficiency) has been not related to higher managerial skills, rather to cost and revenue skimping and bad management.

Keywords: banking risk, capital, efficiency

JEL Classification: G21, D24, C23, E44

working papers series


Date posted: October 22, 2010  

Suggested Citation

Fiordelisi, Franco, Marques-Ibanez, David and Molyneux, Philip, Efficiency and Risk-Taking in European Banking (December 1, 2009). Available at SSRN: http://ssrn.com/abstract=1695392

Contact Information

Franco Fiordelisi (Contact Author)
University of Rome III, Italy ( email )
Via Silvio D'amico, 77
Rome, Rome 00145
Italy
Washington University, Saint Louis - Olin Business School ( email )
One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States
David Marques-Ibanez
European Central Bank (ECB) ( email )
Kaiserstrasse 29
Frankfurt am Main, D-60311
Germany
49 6913 44 6460 (Phone)
49 6913 44 6460 (Fax)
Philip Molyneux
Bangor University, Bangor Business School ( email )
Bangor Gwynedd LL57 2DG, Wales
United Kingdom
01248 38 2170 (Phone)
Feedback to SSRN (Beta)


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