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Bank Risk during the Financial Crisis: Do business models matter?

  • Yener Altunbas


    (Bangor Business School)

  • Simone Manganelli

    (European Central Bank)

  • David Marques-Ibanez

    (European Central Bank)

We exploit the 2007-2009 financial crisis to analyze how risk relates to bank business models. Institutions with higher risk exposure had less capital, larger size, greater reliance on short-term market funding, and aggressive credit growth. Business models related to significantly reduced bank risk were characterized by a strong deposit base and greater income diversification. The effect of business models is non-linear: it has a different impact on riskier banks. Finally, it is difficult to establish in real time whether greater stock market capitalization involves real value creation or the accumulation of latent risk.

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Paper provided by Bangor Business School, Prifysgol Bangor University (Cymru / Wales) in its series Working Papers with number 12003.

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Date of creation: Feb 2012
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Handle: RePEc:bng:wpaper:12003
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