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Can parents protect their children? Risk comparison analysis between affiliates of multi- and single-bank holding companies

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journal contribution
posted on 05.02.2020, 09:33 by Kim Cuong Ly, Hong LiuHong Liu, Kwaku Opong
We find that multi-bank holding companies (MBHCs) in the U.S. have lower insolvency risk than single-bank holding companies (SBHCs) at the parent level, but have significantly higher insolvency risk than the latter at the subsidiary level. Our results suggest that MBHC parents tend to benefit from the internal capital market while allowing for more risk-taking at the individual levels. We further find that the higher risk for MBHC affiliates is because of the organizational and geographic complexity at the MBHC parent level. Our results highlight the importance of government regulation on banks at both parent and subsidiary levels.

History

School

  • Business and Economics

Department

  • Business

Published in

Journal of Financial Stability

Volume

37

Pages

1 - 10

Publisher

Elsevier BV

Version

AM (Accepted Manuscript)

Rights holder

© Elsevier B.V.

Publisher statement

This paper was accepted for publication in the journal Journal of Financial Stability and the definitive published version is available at https://doi.org/10.1016/j.jfs.2018.05.001.

Acceptance date

04/05/2018

Publication date

2018-05-05

Copyright date

2018

ISSN

1572-3089

Language

en

Depositor

Prof Hong Liu. Deposit date: 4 February 2020