|
|
|
|
||||
|
||||
Size, Leverage, and Risk-Taking of Financial InstitutionsSanjai BhagatUniversity of Colorado at Boulder - Department of Finance Brian J. BoltonPortland State University - School of Business Administration Jun LuCentral University of Finance and Economics (CUFE) August 2, 2012 Abstract: We investigate the link between firm size and risk-taking among financial institutions during the period of 1998-2008 and make three contributions. First, size is positively correlated with risk-taking measures even when controlling for other observable firm characteristics. This is consistent with the notion that “too-big-to-fail” policies distort the risk incentives of financial institutions. Second, a simple decomposition of the primary risk measure, the Z-score, reveals that financial firms engage in excessive risk-taking mainly through increased leverage. Third, we find that bank corporate governance measured as the median director dollar stockholding has a substantial impact on reducing firms’ risk-taking.
Number of Pages in PDF File: 56 Keywords: Bank governance, Bank size, Bank capital requirement, Corporate governance JEL Classification: G20, G21, G32, G34 working papers seriesDate posted: August 2, 2012Suggested CitationContact Information
|
|
||||||||||||||||||||||||||||||||||||
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
FAQ
Terms of Use
Privacy Policy
Copyright
This page was processed by apollo8 in 0.406 seconds
