Degl'Innocenti, Marta and Fiordelisi, Franco and Girardone, Claudia and Radic, Nemanja (2019) Competition and risk-taking in investment banking. Financial Markets, Institutions and Instruments, 28 (2). pp. 241-260. DOI https://doi.org/10.1111/fmii.12113
Degl'Innocenti, Marta and Fiordelisi, Franco and Girardone, Claudia and Radic, Nemanja (2019) Competition and risk-taking in investment banking. Financial Markets, Institutions and Instruments, 28 (2). pp. 241-260. DOI https://doi.org/10.1111/fmii.12113
Degl'Innocenti, Marta and Fiordelisi, Franco and Girardone, Claudia and Radic, Nemanja (2019) Competition and risk-taking in investment banking. Financial Markets, Institutions and Instruments, 28 (2). pp. 241-260. DOI https://doi.org/10.1111/fmii.12113
Abstract
How does competition affect the investment banking business and the risks individual institutions are exposed to? Using a large sample of investment banks operating in seven developed economies over 1997-2014, we apply a panel VAR model to examine the relationships between competition and risk without assuming any a priori restrictions. Our main finding is that investment banks’ higher risk exposure, measured as a long-term capital-at-risk and return volatility, was facilitated by greater competitive pressures especially for full service investment banks but also for boutique investment banks. Overall, we find some evidence that more competition leads to more fragility before and during the recent financial crisis.
Item Type: | Article |
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Additional Information: | Source info: Financial Markets, Institutions & Instruments, Vol. 28, Issue 2, pp. 241-260, 2019 |
Uncontrolled Keywords: | Investment Banking; Competition; Risk; Panel VAR |
Subjects: | H Social Sciences > HG Finance |
Divisions: | Faculty of Social Sciences Faculty of Social Sciences > Essex Business School |
SWORD Depositor: | Unnamed user with email elements@essex.ac.uk |
Depositing User: | Unnamed user with email elements@essex.ac.uk |
Date Deposited: | 14 Dec 2017 10:17 |
Last Modified: | 16 May 2024 19:09 |
URI: | http://repository.essex.ac.uk/id/eprint/20767 |
Available files
Filename: Competition_and_risk_taking_in_Inv._Banking_final.pdf