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Risk Taking by Banks in the Transition Countries

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  • Rainer Haselmann

    ()
    (University of Mainz, Jakob-Welder Weg 4, 55128 Mainz, Germany.)

  • Paul Wachtel

    ()
    (Stern School of Business, New York University, 44 West 4th Street, New York, NY 10012, USA.)

Abstract

Although the performance and privatisation of transition banks have been widely studied already, little is known about their risk-taking and risk management activities. We use a new European Bank for Reconstruction and Development (EBRD) survey data set of banks to examine risk taking by banks in the transition countries. We find no indication of excessive risk taking by specific ownership or size categories of banks. Also, we find no connections between risk taking and the quality of the institutional environment although an unsound environment is associated with higher levels of capital.

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Bibliographic Info

Article provided by Palgrave Macmillan in its journal Comparative Economic Studies.

Volume (Year): 49 (2007)
Issue (Month): 3 (September)
Pages: 411-429

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Handle: RePEc:pal:compes:v:49:y:2007:i:3:p:411-429

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References

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  1. Ralph de Haas & Iman van Lelyveld, 2003. "Foreign Banks and Credit Stability in Central and Eastern Europe: A Panel Data Analysis," DNB Staff Reports (discontinued), Netherlands Central Bank 109, Netherlands Central Bank.
  2. Rafael LaPorta & Florencio Lopez de-Silanes & Andrei Shleifer & Robert W. Vishny, 1996. "Law and Finance," Harvard Institute of Economic Research Working Papers, Harvard - Institute of Economic Research 1768, Harvard - Institute of Economic Research.
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    • La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert W., 1998. "Law and Finance," Scholarly Articles 3451310, Harvard University Department of Economics.
  3. Paul Wachtel & Rainer Haselmann, 2006. "Institutions and Bank Behavior," Working Papers, New York University, Leonard N. Stern School of Business, Department of Economics 06-16, New York University, Leonard N. Stern School of Business, Department of Economics.
  4. Claeys, Sophie & Vander Vennet, Rudi, 2008. "Determinants of bank interest margins in Central and Eastern Europe: A comparison with the West," Economic Systems, Elsevier, Elsevier, vol. 32(2), pages 197-216, June.
  5. Haselmann, Rainer, 2006. "Strategies of foreign banks in transition economies," Emerging Markets Review, Elsevier, Elsevier, vol. 7(4), pages 283-299, December.
  6. Honohan,Patrick & Laeven,Luc (ed.), 2005. "Systemic Financial Crises," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521851855.
  7. Bonin, John P. & Hasan, Iftekhar & Wachtel, Paul, 2005. "Bank performance, efficiency and ownership in transition countries," Journal of Banking & Finance, Elsevier, Elsevier, vol. 29(1), pages 31-53, January.
  8. Haselmann, Rainer & Pistor, Katharina & Vig, Vikrant, 2006. "How Law Affects Lending," MPRA Paper 157, University Library of Munich, Germany.
  9. Steven Fries & Damien Neven & Paul Seabright & Anita Taci, 2006. "Market entry, privatization and bank performance in transition," The Economics of Transition, The European Bank for Reconstruction and Development, The European Bank for Reconstruction and Development, vol. 14(4), pages 579-610, October.
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Cited by:
  1. Iulia Iuga, 2009. "The Assessment Procedure Of The Operational Risk Events," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 1(11), pages 49.
  2. Iulia Iuga, 2008. "Analysis On The Romanian Banking Legislation And The Banks Probability Of Default," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 1(10), pages 43.
  3. Bonin, John & Hasan, Iftekhar & Wachtel , Paul, 2014. "Banking in transition countries," BOFIT Discussion Papers, Bank of Finland, Institute for Economies in Transition 8/2014, Bank of Finland, Institute for Economies in Transition.
  4. Berger, Allen N. & Hasan, Iftekhar & Korhonen, Iikka & Zhou, Mingming, 2010. "Does diversification increase or decrease bank risk and performance? Evidence on diversification and the risk-return tradeoff in banking," BOFIT Discussion Papers, Bank of Finland, Institute for Economies in Transition 9/2010, Bank of Finland, Institute for Economies in Transition.
  5. Fang, Yiwei & Hasan, Iftekhar & Marton, Katherin, 2014. "Institutional development and bank stability: Evidence from transition countries," Journal of Banking & Finance, Elsevier, Elsevier, vol. 39(C), pages 160-176.
  6. Beck, Thorsten & Brown, Martin, 2011. "Use of Banking Services in Emerging Markets--Household-Level Evidence," CEPR Discussion Papers, C.E.P.R. Discussion Papers 8475, C.E.P.R. Discussion Papers.
  7. Fang, Yiwei & Hasan, Iftekhar & Marton, Katherin & Waisman, Maya, 2014. "Bank valuation in new EU member countries," Economic Systems, Elsevier, Elsevier, vol. 38(1), pages 55-72.
  8. Iuga Iulia & Socol Adela, 2010. "Measuring Model For Bad Loans In Banks. The Default Probability Model," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(2), pages 754-759, December.
  9. Beck, T.H.L. & Brown, M., 2011. "Use of Banking Services in Emerging Markets -Household-Level Evidence (Replaces CentER DP 2010-092)," Discussion Paper, Tilburg University, Center for Economic Research 2011-089, Tilburg University, Center for Economic Research.
  10. Iulia Iuga & Ruxandra Lazea, 2012. "Study Regarding The Influence Of The Unemployment Rate Over Non-Performing Loans In Romania Using The Correlation Indicator," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 2(14), pages 18.
  11. Thorsten Beck & Martin Brown, 2011. "Which Households Use Banks? Evidence from the Transition Economies," Working Papers 2011-01, Swiss National Bank.
  12. Anca Pruteanu-Podpiera & Jiří Podpiera, 2008. "The Czech transition banking sector instability: the role of operational cost management," Economic Change and Restructuring, Springer, Springer, vol. 41(3), pages 209-219, September.
  13. Pradeep Mitra & Marcelo Selowsky & Juan Zalduendo, 2010. "Turmoil at Twenty : Recession, Recovery, and Reform in Central and Eastern Europe and the Former Soviet Union," World Bank Publications, The World Bank, number 2682, August.
  14. Beck, T.H.L. & Brown, M., 2010. "Which Households Use Banks? Evidence from the Transition Economies (Replaced by CentER DP 2011-089)," Discussion Paper, Tilburg University, Center for Economic Research 2010-92, Tilburg University, Center for Economic Research.
  15. Georgios P. Kouretas & Chris Tsoumas, 2013. "Bank Risk-Taking in CEE Countries," Central European Journal of Economic Modelling and Econometrics, CEJEME, CEJEME, vol. 5(2), pages 103-123, June.
  16. Agoraki, Maria-Eleni & Delis, Manthos D & Pasiouras, Fotios, 2009. "Regulations, competition and bank risk-taking in transition countries," MPRA Paper 16495, University Library of Munich, Germany.
  17. Georgios Kouretas & Chris Tsoumas & Anastasios A. Drakos, 2013. "Ownership, institutions and bank risk-taking in Central and Eastern European countries," EcoMod2013, EcoMod 5204, EcoMod.

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