Banks as Delegated Risk Managers
AbstractRisk management, although of major importance in the banking industry in practice, plays only a minor role in the theory of banking. We reduce this gap by putting forward a model in which risk managers - specialists that can find out correlations between risky assets - endogenously take over typical functions of banks. They grant loans, they consult on financial questions with firms that are threatened by bankruptcy, and they sign tailor-made hedge transactions with these firms. Delegation costs are innately low if banks assume the function of risk managers in an economy. Risk management can be seen as a core competence of banks.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim in its series Sonderforschungsbereich 504 Publications with number 03-13.
Length: 29 pages
Date of creation: 11 Sep 2003
Date of revision:
Note: The author thanks Elena Carletti, Juliane Godehardt, Martin
Contact details of provider:
Postal: D-68131 Mannheim
Phone: (49) (0) 621-292-2547
Fax: (49) (0) 621-292-5594
Web page: http://www.sfb504.uni-mannheim.de/
More information through EDIRC
Web page: http://www.sfb504.uni-mannheim.de
Other versions of this item:
- NEP-ALL-2005-03-06 (All new papers)
- NEP-CBA-2003-11-30 (Central Banking)
- NEP-RMG-2005-03-06 (Risk Management)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Schmidt, Reinhard H. & Hackethal, Andreas & Tyrell, Marcel, 1999. "Disintermediation and the Role of Banks in Europe: An International Comparison," Journal of Financial Intermediation, Elsevier, Elsevier, vol. 8(1-2), pages 36-67, January.
- Swank, Job, 1996. "Theories of the Banking Firm: A Review of the Literature," Bulletin of Economic Research, Wiley Blackwell, vol. 48(3), pages 173-207, July.
- Diamond, Douglas W, 1984. "Financial Intermediation and Delegated Monitoring," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 51(3), pages 393-414, July.
- Allen, Franklin & Santomero, Anthony M., 2001.
"What do financial intermediaries do?,"
Journal of Banking & Finance,
Elsevier, vol. 25(2), pages 271-294, February.
- Franklin Allen & Anthony M. Santomero, 1999. "What Do Financial Intermediaries Do?," Center for Financial Institutions Working Papers, Wharton School Center for Financial Institutions, University of Pennsylvania 99-30, Wharton School Center for Financial Institutions, University of Pennsylvania.
- Drew Fudenberg & Jean Tirole, 1991. "Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061414, December.
- Williamson, Stephen D., 1986.
"Costly monitoring, financial intermediation, and equilibrium credit rationing,"
Journal of Monetary Economics, Elsevier,
Elsevier, vol. 18(2), pages 159-179, September.
- Stephen D. Williamson, 1984. "Costly Monitoring, Financial Intermediation, and Equilibrium Credit Rationing," Working Papers, Queen's University, Department of Economics 583, Queen's University, Department of Economics.
- Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
- H. Franklin Allen & Douglas Gale, .
"Innovation in Financial Services, Relationships and Risk Sharing,"
Center for Financial Institutions Working Papers, Wharton School Center for Financial Institutions, University of Pennsylvania
97-26, Wharton School Center for Financial Institutions, University of Pennsylvania.
- Franklin Allen & Douglas Gale, 1999. "Innovations in Financial Services, Relationships, and Risk Sharing," Management Science, INFORMS, INFORMS, vol. 45(9), pages 1239-1253, September.
- Bhattacharya Sudipto & Thakor Anjan V., 1993. "Contemporary Banking Theory," Journal of Financial Intermediation, Elsevier, Elsevier, vol. 3(1), pages 2-50, October.
- Winton, Andrew, 1995. "Costly State Verification and Multiple Investors: The Role of Seniority," Review of Financial Studies, Society for Financial Studies, vol. 8(1), pages 91-123.
- Baltensperger, Ernst, 1980. "Alternative approaches to the theory of the banking firm," Journal of Monetary Economics, Elsevier, Elsevier, vol. 6(1), pages 1-37, January.
- Boot, Arnoud W. A., 2000. "Relationship Banking: What Do We Know?," Journal of Financial Intermediation, Elsevier, Elsevier, vol. 9(1), pages 7-25, January.
- Scholtens, Bert & van Wensveen, Dick, 2000. "A critique on the theory of financial intermediation," Journal of Banking & Finance, Elsevier, vol. 24(8), pages 1243-1251, August.
- I Wayan Nuka Lantara, 2012. "The Use of Derivatives as a Risk Management Instrument: Evidence from Indonesian Non-Financial Firms," International Journal of Business and Economics, College of Business, and College of Finance, Feng Chia University, Taichung, Taiwan, vol. 11(1), pages 45-62, June.
- Siti Zaleha Abdul Rasid & Abdul Rahim Abdul Rahman & Wan Khairuzzaman Wan Ismail, 2011. "Management accounting and risk management in Malaysian financial institutions: An exploratory study," Managerial Auditing Journal, Emerald Group Publishing, Emerald Group Publishing, vol. 26(7), pages 566-585, July.
- Vitor Gonçalves & Francisco Vitorino Martins & Elísio Brandão, 2014. "The Determinants of Credit Default on Portuguese Start-Up Firms: .An Econometric model," FEP Working Papers 534, Universidade do Porto, Faculdade de Economia do Porto.
- Trauten, Andreas, 2004. "Zur Effizienz von Wertpapieremissionen über Internetplattformen," Working Papers 8, Competence Center Internet Economy and Hybrid Systems, European Research Center for Information Systems (ERCIS), University of Münster.
- Silva Buston, C.F., 2013. "Active Risk Management and Banking Stability," Discussion Paper, Tilburg University, Center for Economic Research 2013-068, Tilburg University, Center for Economic Research.
- Ralf Bebenroth & Diemo Dietrich & Uwe Vollmer, 2009.
"Bank regulation and supervision in bank-dominated financial systems: a comparison between Japan and Germany,"
European Journal of Law and Economics, Springer,
Springer, vol. 27(2), pages 177-209, April.
- Ralf Bebenroth & Diemo Dietrich & Uwe Vollmer, 2007. "Bank regulation and supervision in Japan and Germany: A comparison," Discussion Paper Series, Research Institute for Economics & Business Administration, Kobe University 211, Research Institute for Economics & Business Administration, Kobe University.
- Branimir Gruic & Paul Van den Bergh, 2012. "Statistics on securities issuance and holdings," IFC Bulletins chapters, in: Bank for International Settlements (ed.), Proceedings of the workshop "Data requirements for monitoring derivative transactions", organised by the People's Bank of China and the Irving Fisher , volume 35, pages 89-101 Bank for International Settlements.
- Godbillon-Camus, Brigitte & Godlewski, Christophe, 2005. "Credit risk management in banks: Hard information, soft Information and manipulation," MPRA Paper 1873, University Library of Munich, Germany.
- Laux, Christian & Walz, Uwe, 2006. "Tying lending and underwriting: Scope economies, incentives, and reputation," CFS Working Paper Series 2006/27, Center for Financial Studies (CFS).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Carsten Schmidt).
If references are entirely missing, you can add them using this form.