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Efficiency and Risk-Taking in European Banking

Author Info

Listed author(s):
  • Franco Fiordelisi

    (University of Rome III)

  • David Marques

    (European Central Bank)

  • Phil Molyneux

    ()

    (Bangor Business School)

Abstract

The recent period of crisis in credit markets has highlighted the crucial role of bank risk taking. Our paper assesses the inter-temporal relationships among bank efficiency, capital and bank risk-taking in the EU-26 commercial banking industry between 1995 and 2007. Our results support the bad management-, luck-, cost and revenue skimping hypotheses. Overall, our paper provides evidence that higher performance (enhanced efficiency) has been not related to higher managerial skills, rather to cost and revenue skimping and bad management.

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File URL: http://www.bangor.ac.uk/business/docs/BBSWP09004.pdf
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Paper provided by Bangor Business School, Prifysgol Bangor University (Cymru / Wales) in its series Working Papers with number 09004.

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Length: 40 pages
Date of creation: Dec 2009
Handle: RePEc:bng:wpaper:09004
Contact details of provider: Postal:
Gwynedd LL57 2DG

Phone: +44 (0) 1248 383648
Web page: http://www.bangor.ac.uk/business/research/

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Keywords: banking risk; capital; efficiency;

Find related papers by JEL classification:

  • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
  • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
  • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
  • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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Cited by:

  1. Memić Deni, 2015. "Banking Competition and Efficiency: Empirical Analysis on the Bosnia and Herzegovina Using Panzar-Rosse Model," Business Systems Research, De Gruyter Open, vol. 6(1), pages 72-92, March.
  2. Paolo Coccorese & Giovanni Ferri & Fabiola Spiniello, 2017. "Are mergers among cooperative banks worth a dime? Evidence on post-M&A efficiency in Italy," CERBE Working Papers wpC18, CERBE Center for Relationship Banking and Economics.

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