IDEAS home Printed from https://ideas.repec.org/p/bng/wpaper/19004.html
   My bibliography  Save this paper

The ‘risk dividend’ in banks’ internal capital markets

Author

Listed:
  • Yener Altunbaş

    () (Bangor University)

  • John Thornton

    () (Office of Technical Assistance, US Department of the Treasury
    Bangor University)

  • Tianshu Zhao

    () (Birmingham Business School, University of Birmingham)

Abstract

We examine the impact of banks’ internal capital markets (ICMs) before the 2008-09 financial crisis on bank risk-taking during the crisis in a panel of 8,068 banks across 16 countries. The size of ICMs was an important driver of risk during the crisis when banks with larger ICMs exhibited lower risk levels. Larger ICMs reduced risk further for well capitalized banks. Banks more likely to be in trouble in a crisis are likely to have smaller ICMs, be larger in size, less well capitalized, less efficient, less profitable, and more dependent on market funding.

Suggested Citation

  • Yener Altunbaş & John Thornton & Tianshu Zhao, 2019. "The ‘risk dividend’ in banks’ internal capital markets," Working Papers 19004, Bangor Business School, Prifysgol Bangor University (Cymru / Wales).
  • Handle: RePEc:bng:wpaper:19004
    as

    Download full text from publisher

    File URL: https://www.bangor.ac.uk/business/research/documents/BBSWP-19-04.pdf
    Download Restriction: no

    More about this item

    Keywords

    Banks; governance; risk; CEO power; boards of directors; institutional investors;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bng:wpaper:19004. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Alan Thomas). General contact details of provider: http://edirc.repec.org/data/sabanuk.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.