Journal Article

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

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collection.link.125
https://openknowledge.worldbank.org/handle/10986/4401
collection.name.125
C. Journal articles published externally
dc.contributor.author
Demirguc-Kunt, Asli
dc.contributor.author
Huizinga, Harry
dc.date.accessioned
2012-03-30T07:33:47Z
dc.date.available
2012-03-30T07:33:47Z
dc.date.issued
2010
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
dc.identifier.citation
Journal of Financial Economics
dc.identifier.issn
0304405X
dc.identifier.uri
http://hdl.handle.net/10986/5635
dc.language.iso
EN
dc.relation.uri
http://creativecommons.org/licenses/by-nc-nd/3.0/igo
dc.rights.holder
World Bank
dc.subject
Banks
dc.subject
Other Depository Institutions
dc.subject
Micro Finance Institutions
dc.subject
Mortgages G210
dc.subject
Investment Banking
dc.subject
Venture Capital
dc.subject
Brokerage
dc.subject
Ratings and Ratings Agencies G240
dc.title
Bank Activity and Funding Strategies : The Impact on Risk and Returns
en
dc.title.alternative
Journal of Financial Economics
en
dc.type
Journal Article
en
okr.doctype
Journal Article
okr.externalcontent
External Content
okr.googlescholar.linkpresent
yes
okr.identifier.externaldocumentum
563
okr.journal.nbpages
626-650
okr.language.supported
en
okr.peerreview
Academic Peer Review
okr.relation.associatedurl
http://dx.doi.org/10.1016/j.jfineco.2010.06.004
okr.relation.associatedurl
http://search.ebscohost.com/login.aspx?direct=true&db=eoh&AN=1144684&site=ehost-live
okr.relation.associatedurl
http://www.elsevier.com/wps/find/journaldescription.cws_home/505576/description#description
okr.relation.googlescholar
http://scholar.google.com/scholar?q=doi%3A10.1016%2Fj.jfineco.2010.06.004
okr.volume
98

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