Bank funding and risk taking
Ferrari, Alessandro
Garcia Galindo, Carmen
Petricek, Matic
Winkler, Andreas

Date: 2018
Abstract: In this paper we use a novel approach to address issues of endogeneity in estimating a causal effect of leverage on risk taking by banks. Using data on local bank office deposits and local unemployment we construct an instrument to use in a regression of leverage on a measure of risk taking constructed from new issuance of loans. The results (i. ) confirm that due to limited liability banks increase their risk taking after an exogenous increase in leverage, and (ii. ) that an increase in deposit supply has a direct positive effect on risk taking by banks.
Abstract: The ADEMU Working Paper Series is being supported by the European Commission Horizon 2020 European Union funding for Research & Innovation, grant agreement No 649396.
Note: Número d'acord de subvenció EC/H2020/649396
Rights: Aquest document està subjecte a una llicència d'ús Creative Commons. Es permet la reproducció total o parcial, la distribució, la comunicació pública de l'obra i la creació d'obres derivades, fins i tot amb finalitats comercials, sempre i quan es reconegui l'autoria de l'obra original. Creative Commons
Language: Anglès.
Series: Barcelona Graduate School of Economics: ADEMU working paper series
Series: ADEMU Working Paper Series ; 123
Document: workingPaper

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 Record created 2018-10-23, last modified 2020-05-20

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