Can parents protect their children? Risk comparison analysis between affiliates of multi- and single-bank holding companies
journal contributionposted on 2020-02-05, 09:33 authored 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.
- Business and Economics
Published inJournal of Financial Stability
Pages1 - 10
- AM (Accepted Manuscript)
Rights holder© Elsevier B.V.
Publisher statementThis 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.