Bank Activity and Funding Strategies : The Impact on Risk and Returns

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dc.contributor.author
Demirguc-Kunt, Asli
en_US
dc.contributor.author
Huizinga, Harry
en_US
dc.date.accessioned
2012-03-30T07:33:47Z
en_US
dc.date.available
2012-03-30T07:33:47Z
en_US
dc.date.issued
2010
en_US
dc.identifier.citation
Journal of Financial Economics
en_US
dc.identifier.issn
0304405X
en_US
dc.identifier.uri
http://hdl.handle.net/10986/5635
en_US
dc.description.abstract
This paper examines the implications of bank activity and short-term funding strategies for bank risk and return using an international sample of 1,334 banks in 101 countries leading up to the 2008 financial crisis. Expansion into noninterest income-generating activities such as trading increases the rate of return on assets, and it could offer some risk diversification benefits at very low levels. Nondeposit, wholesale funding in contrast lowers the rate of return on assets, while it can offer some risk reduction at commonly observed low levels of nondeposit funding. A sizable proportion of banks, however, attract most of their short-term funding in the form of nondeposits at a cost of enhanced bank fragility. Overall, banking strategies that rely prominently on generating noninterest income or attracting nondeposit funding are very risky, consistent with the demise of the US investment banking sector.
en_US
dc.language.iso
EN
en_US
dc.relation.uri
http://creativecommons.org/licenses/by-nc-nd/3.0/igo
en_US
dc.subject
Banks
en_US
dc.subject
Other Depository Institutions
en_US
dc.subject
Micro Finance Institutions
en_US
dc.subject
Mortgages G210
en_US
dc.subject
Investment Banking
en_US
dc.subject
Venture Capital
en_US
dc.subject
Brokerage
en_US
dc.subject
Ratings and Ratings Agencies G240
en_US
dc.title
Bank Activity and Funding Strategies : The Impact on Risk and Returns
en_US
dc.title.alternative
Journal of Financial Economics
en_US
dc.type
Journal Article
en_US
okr.identifier.externaldocumentum
563
en_US
okr.volume
98
en_US
okr.doctype
Journal Article
en_US
dc.rights.holder
World Bank
en_US
okr.peerreview
Academic Peer Review
en_US
okr.relation.associatedurl
http://dx.doi.org/10.1016/j.jfineco.2010.06.004
en_US
okr.relation.associatedurl
http://search.ebscohost.com/login.aspx?direct=true&db=eoh&AN=1144684&site=ehost-live
en_US
okr.relation.associatedurl
http://www.elsevier.com/wps/find/journaldescription.cws_home/505576/description#description
en_US
okr.externalcontent
External Content
en_US
okr.journal.nbpages
626-650
en_US
okr.relation.googlescholar
http://scholar.google.com/scholar?q=doi%3A10.1016%2Fj.jfineco.2010.06.004
okr.googlescholar.linkpresent
yes

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