Lending Concentration, Bank Performance and Systemic Risk : Exploring Cross-Country Variation
Using both market-based and annual report-based approaches to measure lending specialization for a broad cross-section of banks and countries over the period 2002 to 2011, this paper is the first to empirically gauge the relationship between bank l...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2013
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| Online Access: | http://documents.worldbank.org/curated/en/2013/09/18259886/lending-concentration-bank-performance-systemic-risk-exploring-cross-country-variation http://hdl.handle.net/10986/15830 |
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okr-10986-15830 |
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oai_dc |
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Digital Repository |
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Foreign Institution |
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Digital Repositories |
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World Bank Open Knowledge Repository |
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World Bank |
| language |
English en_US |
| topic |
ACCESS TO BANK ACCOUNTING ACCOUNTING PRACTICES ASSET ALLOCATION ASSET CLASSES ASSET DIVERSIFICATION ASSET GROWTH ASSET PORTFOLIOS ASSET PRICES ASSET RATIO ASSET RATIOS ASSETS RATIO BALANCE SHEETS BANK ASSET BANK COMPETITION BANK DEPOSITS BANK HOLDING BANK HOLDING COMPANIES BANK LENDING BANK LOAN BANK PERFORMANCE BANK POLICY BANK REGULATION BANK SIZE BANK VALUATION BANKING CRISES BANKING CRISIS BANKING MARKET BANKING SECTOR BANKING SYSTEM BANKS BASELINE RESULT BENCHMARK BENCHMARK PORTFOLIO BIASES BOOK RATIO BOOK VALUE BOOK VALUES BORROWER BROAD MARKET INDEX BUSINESS LOAN BUSINESS LOANS CAPITAL MARKET CAPITAL REQUIREMENT CAPITAL REQUIREMENTS CAPITALIZATION CENTRAL BANK CENTRAL BANKS CENTRAL GOVERNMENTS COLLATERAL COMMERCIAL BANKS COMPETITIVE MARKETS CONSUMER GOODS COOPERATIVE BANKS COOPERATIVES COUNTRY COMPARISONS CREDIT MARKET CREDIT MARKETS CREDIT PORTFOLIOS CREDIT RATIONING CREDIT RISK DEBT DEFAULT RISK DEPOSIT DEPOSITS DERIVATIVE DERIVATIVE CONTRACTS DEVELOPING COUNTRIES DUMMY VARIABLES ECONOMIC DEVELOPMENT ECONOMICS ECONOMIES OF SCALE EMERGING MARKET EMERGING MARKET ECONOMIES EMERGING MARKETS EMPLOYMENT EQUILIBRIUM CREDIT EQUITY PRICES FACTOR LOADING FACTOR LOADINGS FINANCIAL CRISIS FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIATION FINANCIAL REPORTING FINANCIAL SERVICES FINANCIAL STABILITY FINANCIAL STATEMENTS FINANCIAL STRESS FINANCIAL STUDIES FINANCIAL SYSTEM FIRM PERFORMANCE GLOBAL BANKING GOVERNMENT DEBT GREATER ACCESS GROWTH STOCKS HOUSEHOLD INCOME HOUSEHOLDS INCOME LEVELS INCOME STATEMENTS INDIVIDUAL LOANS INDUSTRIAL LOANS INEQUALITY INFORMATION ACQUISITION INSTITUTIONAL INVESTORS INSURANCE INTEREST INCOME INTERNATIONAL BANK INVESTMENT STRATEGIES LABOUR MARKET LENDING PORTFOLIOS LIQUIDITY LIQUIDITY RATIO LOAN LOAN APPLICATIONS LOAN EXPOSURES LOAN LOSS PROVISIONS LOAN PORTFOLIO LOAN PORTFOLIOS LOCAL MARKET MARGINAL COST MARKET CAPITALIZATION MARKET COMPETITION MARKET DATA MARKET INDEX MARKET INFORMATION MARKET PARTICIPANTS MARKET PORTFOLIO MARKET STRUCTURES MARKET VALUE MONEY MARKET MUTUAL FUND MUTUAL FUND RETURNS MUTUAL FUND STYLES NET INTEREST MARGIN NET WORTH OPERATING INCOME OVERALL PORTFOLIO OWNERSHIP STRUCTURES PERFORMANCE MEASUREMENT PERFORMANCE MEASURES POOL OF BORROWERS PORTFOLIO DIVERSIFICATION PORTFOLIO MANAGEMENT PORTFOLIO MANAGER POSITIVE COEFFICIENT POST-CRISIS PERIOD PREVIOUS STUDIES PROBABILITY OF DEFAULT PROFITABILITY REAL ESTATE RELATIONSHIP LENDING RETURN DATA RETURN ON ASSETS RETURN ON EQUITY RETURN REGRESSION RETURN VARIABLES RETURN VOLATILITY RETURN-GENERATING MODEL RETURNS RETURNS ON EQUITY RISK DIVERSIFICATION RISK EXPOSURE RISK EXPOSURES RISK FACTOR RISK MANAGEMENT RISK MANAGEMENT TOOLS RISK MEASURES RISK MITIGATION RISK OF DEFAULT RISK TAKING SAVINGS SAVINGS BANKS SHAREHOLDERS SMALL BANKS SOVEREIGN RISK STOCK INDEX STOCK MARKET STOCK PRICE STOCK PRICES STOCK RETURN STOCK RETURNS STOCKS SUBSIDIARIES SYSTEMATIC RISK SYSTEMIC RISK TAX TAX TREATMENT TELECOMMUNICATIONS TRADING TRADING INCOME VALUATION VOLATILITY |
| spellingShingle |
ACCESS TO BANK ACCOUNTING ACCOUNTING PRACTICES ASSET ALLOCATION ASSET CLASSES ASSET DIVERSIFICATION ASSET GROWTH ASSET PORTFOLIOS ASSET PRICES ASSET RATIO ASSET RATIOS ASSETS RATIO BALANCE SHEETS BANK ASSET BANK COMPETITION BANK DEPOSITS BANK HOLDING BANK HOLDING COMPANIES BANK LENDING BANK LOAN BANK PERFORMANCE BANK POLICY BANK REGULATION BANK SIZE BANK VALUATION BANKING CRISES BANKING CRISIS BANKING MARKET BANKING SECTOR BANKING SYSTEM BANKS BASELINE RESULT BENCHMARK BENCHMARK PORTFOLIO BIASES BOOK RATIO BOOK VALUE BOOK VALUES BORROWER BROAD MARKET INDEX BUSINESS LOAN BUSINESS LOANS CAPITAL MARKET CAPITAL REQUIREMENT CAPITAL REQUIREMENTS CAPITALIZATION CENTRAL BANK CENTRAL BANKS CENTRAL GOVERNMENTS COLLATERAL COMMERCIAL BANKS COMPETITIVE MARKETS CONSUMER GOODS COOPERATIVE BANKS COOPERATIVES COUNTRY COMPARISONS CREDIT MARKET CREDIT MARKETS CREDIT PORTFOLIOS CREDIT RATIONING CREDIT RISK DEBT DEFAULT RISK DEPOSIT DEPOSITS DERIVATIVE DERIVATIVE CONTRACTS DEVELOPING COUNTRIES DUMMY VARIABLES ECONOMIC DEVELOPMENT ECONOMICS ECONOMIES OF SCALE EMERGING MARKET EMERGING MARKET ECONOMIES EMERGING MARKETS EMPLOYMENT EQUILIBRIUM CREDIT EQUITY PRICES FACTOR LOADING FACTOR LOADINGS FINANCIAL CRISIS FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIATION FINANCIAL REPORTING FINANCIAL SERVICES FINANCIAL STABILITY FINANCIAL STATEMENTS FINANCIAL STRESS FINANCIAL STUDIES FINANCIAL SYSTEM FIRM PERFORMANCE GLOBAL BANKING GOVERNMENT DEBT GREATER ACCESS GROWTH STOCKS HOUSEHOLD INCOME HOUSEHOLDS INCOME LEVELS INCOME STATEMENTS INDIVIDUAL LOANS INDUSTRIAL LOANS INEQUALITY INFORMATION ACQUISITION INSTITUTIONAL INVESTORS INSURANCE INTEREST INCOME INTERNATIONAL BANK INVESTMENT STRATEGIES LABOUR MARKET LENDING PORTFOLIOS LIQUIDITY LIQUIDITY RATIO LOAN LOAN APPLICATIONS LOAN EXPOSURES LOAN LOSS PROVISIONS LOAN PORTFOLIO LOAN PORTFOLIOS LOCAL MARKET MARGINAL COST MARKET CAPITALIZATION MARKET COMPETITION MARKET DATA MARKET INDEX MARKET INFORMATION MARKET PARTICIPANTS MARKET PORTFOLIO MARKET STRUCTURES MARKET VALUE MONEY MARKET MUTUAL FUND MUTUAL FUND RETURNS MUTUAL FUND STYLES NET INTEREST MARGIN NET WORTH OPERATING INCOME OVERALL PORTFOLIO OWNERSHIP STRUCTURES PERFORMANCE MEASUREMENT PERFORMANCE MEASURES POOL OF BORROWERS PORTFOLIO DIVERSIFICATION PORTFOLIO MANAGEMENT PORTFOLIO MANAGER POSITIVE COEFFICIENT POST-CRISIS PERIOD PREVIOUS STUDIES PROBABILITY OF DEFAULT PROFITABILITY REAL ESTATE RELATIONSHIP LENDING RETURN DATA RETURN ON ASSETS RETURN ON EQUITY RETURN REGRESSION RETURN VARIABLES RETURN VOLATILITY RETURN-GENERATING MODEL RETURNS RETURNS ON EQUITY RISK DIVERSIFICATION RISK EXPOSURE RISK EXPOSURES RISK FACTOR RISK MANAGEMENT RISK MANAGEMENT TOOLS RISK MEASURES RISK MITIGATION RISK OF DEFAULT RISK TAKING SAVINGS SAVINGS BANKS SHAREHOLDERS SMALL BANKS SOVEREIGN RISK STOCK INDEX STOCK MARKET STOCK PRICE STOCK PRICES STOCK RETURN STOCK RETURNS STOCKS SUBSIDIARIES SYSTEMATIC RISK SYSTEMIC RISK TAX TAX TREATMENT TELECOMMUNICATIONS TRADING TRADING INCOME VALUATION VOLATILITY Beck, Thorsten De Jonghe, Olivier Lending Concentration, Bank Performance and Systemic Risk : Exploring Cross-Country Variation |
| relation |
Policy Research Working Paper;No. 6604 |
| description |
Using both market-based and annual
report-based approaches to measure lending specialization
for a broad cross-section of banks and countries over the
period 2002 to 2011, this paper is the first to empirically
gauge the relationship between bank lending specialization
and bank performance and stability in an international
sample. Theory suggests that banks might benefit from
specialization in the form of higher screening and
monitoring efficiency, while a diversified loan portfolio
might also enhance stability. This paper finds that sectoral
specialization increases volatility and systemic risk
exposures, while not leading to higher returns. The paper
also documents important time, cross-bank, and cross-county
variation in this relationship, which is stronger post 2007,
for richer countries, countries without regulatory
requirements on diversification, banks with lower market
power, and banks with more traditional intermediation models. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Beck, Thorsten De Jonghe, Olivier |
| author_facet |
Beck, Thorsten De Jonghe, Olivier |
| author_sort |
Beck, Thorsten |
| title |
Lending Concentration, Bank Performance and Systemic Risk : Exploring Cross-Country Variation |
| title_short |
Lending Concentration, Bank Performance and Systemic Risk : Exploring Cross-Country Variation |
| title_full |
Lending Concentration, Bank Performance and Systemic Risk : Exploring Cross-Country Variation |
| title_fullStr |
Lending Concentration, Bank Performance and Systemic Risk : Exploring Cross-Country Variation |
| title_full_unstemmed |
Lending Concentration, Bank Performance and Systemic Risk : Exploring Cross-Country Variation |
| title_sort |
lending concentration, bank performance and systemic risk : exploring cross-country variation |
| publisher |
World Bank, Washington, DC |
| publishDate |
2013 |
| url |
http://documents.worldbank.org/curated/en/2013/09/18259886/lending-concentration-bank-performance-systemic-risk-exploring-cross-country-variation http://hdl.handle.net/10986/15830 |
| _version_ |
1764432096190791680 |
| spelling |
okr-10986-158302021-04-23T14:03:27Z Lending Concentration, Bank Performance and Systemic Risk : Exploring Cross-Country Variation Beck, Thorsten De Jonghe, Olivier ACCESS TO BANK ACCOUNTING ACCOUNTING PRACTICES ASSET ALLOCATION ASSET CLASSES ASSET DIVERSIFICATION ASSET GROWTH ASSET PORTFOLIOS ASSET PRICES ASSET RATIO ASSET RATIOS ASSETS RATIO BALANCE SHEETS BANK ASSET BANK COMPETITION BANK DEPOSITS BANK HOLDING BANK HOLDING COMPANIES BANK LENDING BANK LOAN BANK PERFORMANCE BANK POLICY BANK REGULATION BANK SIZE BANK VALUATION BANKING CRISES BANKING CRISIS BANKING MARKET BANKING SECTOR BANKING SYSTEM BANKS BASELINE RESULT BENCHMARK BENCHMARK PORTFOLIO BIASES BOOK RATIO BOOK VALUE BOOK VALUES BORROWER BROAD MARKET INDEX BUSINESS LOAN BUSINESS LOANS CAPITAL MARKET CAPITAL REQUIREMENT CAPITAL REQUIREMENTS CAPITALIZATION CENTRAL BANK CENTRAL BANKS CENTRAL GOVERNMENTS COLLATERAL COMMERCIAL BANKS COMPETITIVE MARKETS CONSUMER GOODS COOPERATIVE BANKS COOPERATIVES COUNTRY COMPARISONS CREDIT MARKET CREDIT MARKETS CREDIT PORTFOLIOS CREDIT RATIONING CREDIT RISK DEBT DEFAULT RISK DEPOSIT DEPOSITS DERIVATIVE DERIVATIVE CONTRACTS DEVELOPING COUNTRIES DUMMY VARIABLES ECONOMIC DEVELOPMENT ECONOMICS ECONOMIES OF SCALE EMERGING MARKET EMERGING MARKET ECONOMIES EMERGING MARKETS EMPLOYMENT EQUILIBRIUM CREDIT EQUITY PRICES FACTOR LOADING FACTOR LOADINGS FINANCIAL CRISIS FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIATION FINANCIAL REPORTING FINANCIAL SERVICES FINANCIAL STABILITY FINANCIAL STATEMENTS FINANCIAL STRESS FINANCIAL STUDIES FINANCIAL SYSTEM FIRM PERFORMANCE GLOBAL BANKING GOVERNMENT DEBT GREATER ACCESS GROWTH STOCKS HOUSEHOLD INCOME HOUSEHOLDS INCOME LEVELS INCOME STATEMENTS INDIVIDUAL LOANS INDUSTRIAL LOANS INEQUALITY INFORMATION ACQUISITION INSTITUTIONAL INVESTORS INSURANCE INTEREST INCOME INTERNATIONAL BANK INVESTMENT STRATEGIES LABOUR MARKET LENDING PORTFOLIOS LIQUIDITY LIQUIDITY RATIO LOAN LOAN APPLICATIONS LOAN EXPOSURES LOAN LOSS PROVISIONS LOAN PORTFOLIO LOAN PORTFOLIOS LOCAL MARKET MARGINAL COST MARKET CAPITALIZATION MARKET COMPETITION MARKET DATA MARKET INDEX MARKET INFORMATION MARKET PARTICIPANTS MARKET PORTFOLIO MARKET STRUCTURES MARKET VALUE MONEY MARKET MUTUAL FUND MUTUAL FUND RETURNS MUTUAL FUND STYLES NET INTEREST MARGIN NET WORTH OPERATING INCOME OVERALL PORTFOLIO OWNERSHIP STRUCTURES PERFORMANCE MEASUREMENT PERFORMANCE MEASURES POOL OF BORROWERS PORTFOLIO DIVERSIFICATION PORTFOLIO MANAGEMENT PORTFOLIO MANAGER POSITIVE COEFFICIENT POST-CRISIS PERIOD PREVIOUS STUDIES PROBABILITY OF DEFAULT PROFITABILITY REAL ESTATE RELATIONSHIP LENDING RETURN DATA RETURN ON ASSETS RETURN ON EQUITY RETURN REGRESSION RETURN VARIABLES RETURN VOLATILITY RETURN-GENERATING MODEL RETURNS RETURNS ON EQUITY RISK DIVERSIFICATION RISK EXPOSURE RISK EXPOSURES RISK FACTOR RISK MANAGEMENT RISK MANAGEMENT TOOLS RISK MEASURES RISK MITIGATION RISK OF DEFAULT RISK TAKING SAVINGS SAVINGS BANKS SHAREHOLDERS SMALL BANKS SOVEREIGN RISK STOCK INDEX STOCK MARKET STOCK PRICE STOCK PRICES STOCK RETURN STOCK RETURNS STOCKS SUBSIDIARIES SYSTEMATIC RISK SYSTEMIC RISK TAX TAX TREATMENT TELECOMMUNICATIONS TRADING TRADING INCOME VALUATION VOLATILITY Using both market-based and annual report-based approaches to measure lending specialization for a broad cross-section of banks and countries over the period 2002 to 2011, this paper is the first to empirically gauge the relationship between bank lending specialization and bank performance and stability in an international sample. Theory suggests that banks might benefit from specialization in the form of higher screening and monitoring efficiency, while a diversified loan portfolio might also enhance stability. This paper finds that sectoral specialization increases volatility and systemic risk exposures, while not leading to higher returns. The paper also documents important time, cross-bank, and cross-county variation in this relationship, which is stronger post 2007, for richer countries, countries without regulatory requirements on diversification, banks with lower market power, and banks with more traditional intermediation models. 2013-09-25T21:03:43Z 2013-09-25T21:03:43Z 2013-09 http://documents.worldbank.org/curated/en/2013/09/18259886/lending-concentration-bank-performance-systemic-risk-exploring-cross-country-variation http://hdl.handle.net/10986/15830 English en_US Policy Research Working Paper;No. 6604 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research |