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Efficiency and Risk-Taking in European Banking

  • Franco Fiordelisi

    (University of Rome III)

  • David Marques

    (European Central Bank)

  • Phil Molyneux

    ()

    (Bangor Business School)

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
Date of revision:
Handle: RePEc:bng:wpaper:09004
Contact details of provider: Postal:
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Web page: http://www.bangor.ac.uk/business/research/

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