Financial Contagion: Bank Characteristics Matter

63 Pages Posted: 12 Jun 2019 Last revised: 11 Aug 2019

See all articles by Sharif Mazumder

Sharif Mazumder

Oklahoma State University - Stillwater - Spears School of Business

Louis R. Piccotti

Oklahoma State University - Stillwater - Spears School of Business

Date Written: August 9, 2019

Abstract

We systematically examine how bank characteristics are related to a bank’s financial contagion exposure. Examining capital requirements, we find evidence that while tier 1 capital requirements are negatively related to a bank’s contagion exposure, the sum of tier 1 and tier 2 capital ratios are positively related to it. Banks with greater financial constraints are less exposed to contagion. Geographic distance between banks is negatively related to contagion exposures and we find evidence that institutional ownership is positively related to banks’ contagion exposures. Finally, we find that board attributes that reduce banks’ risk taking incentives negatively associate with financial contagion.

Keywords: Financial Contagion, Systemic Risk, Corporate Finance, Corporate Governance

JEL Classification: G21, G30

Suggested Citation

Mazumder, Sharif and Piccotti, Louis R., Financial Contagion: Bank Characteristics Matter (August 9, 2019). Available at SSRN: https://ssrn.com/abstract=3394356 or http://dx.doi.org/10.2139/ssrn.3394356

Sharif Mazumder

Oklahoma State University - Stillwater - Spears School of Business ( email )

201 Business
Stillwater, OK 74078-0555
United States

Louis R. Piccotti (Contact Author)

Oklahoma State University - Stillwater - Spears School of Business ( email )

460 Business
Stillwater, OK 74078-0555
United States

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