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Does uniqueness in banking matter?

journal contribution
posted on 08.09.2020, 10:59 by Hong LiuHong Liu, Lars Norden, Fabrizio Spargoli
We investigate whether and how the uniqueness of banking activities affects the performance and systemic risk of U.S. banks. We find that banks performing more unique activities exhibit higher profitability and lower risk, controlling for size, diversification, and other key characteristics. We further find that banks’ sensitivity to systemic risk displays an inversely U-shaped relation with activity uniqueness. We interpret the impact of uniqueness in analogy to recent theories showing that systemic diversity promotes financial stability. Our study highlights the role of uniqueness in banking and has important implications for policy makers and banking regulators.

History

School

  • Business and Economics

Department

  • Business

Published in

Journal of Banking & Finance

Volume

120

Publisher

Elsevier BV

Version

AM (Accepted Manuscript)

Rights holder

© Elsevier

Publisher statement

This paper was accepted for publication in the journal Journal of Banking & Finance and the definitive published version is available at https://doi.org/10.1016/j.jbankfin.2020.105941

Acceptance date

29/08/2020

Publication date

2020-09-02

Copyright date

2020

ISSN

0378-4266

Language

en

Depositor

Prof Hong Liu Deposit date: 4 September 2020

Article number

105941