Skip to Main content Skip to Navigation
Journal articles

Bank Regulation, Risk and Return: Evidence from the Credit and Sovereign Debt Crises

Abstract : In this paper, we analyze whether regulation reduced risk during the credit crisis and the sovereign debt crisis for a cross section of global banks. In this regard, we examine distance to default (Laeven and Levine, 2008), systemic risk (Acharya et al., 2010), idiosyncratic risk, and systematic risk. We employ World Bank survey data on regulations to test our conjectures. We find that regulatory restrictions, official supervisory power, capital stringency, along with private monitoring can explain bank risk in both crises. Additionally, we find that deposit insurance schemes enhance moral hazard, as this encouraged banks to take on more risk and perform poorly during the sovereign debt crisis. Finally, official supervision and private monitoring explains the returns during both crisis periods.
Document type :
Journal articles
Complete list of metadata

https://hal.archives-ouvertes.fr/hal-01161670
Contributor : UMR 8174 Centre d'Économie de la Sorbonne Connect in order to contact the contributor
Submitted on : Monday, June 8, 2015 - 10:11:51 PM
Last modification on : Friday, April 29, 2022 - 10:12:42 AM

Identifiers

  • HAL Id : hal-01161670, version 1

Collections

Citation

Hafiz Hoque, Dimitris Andriosopoulos, Kostas Andriosopoulos, Raphaël Douady. Bank Regulation, Risk and Return: Evidence from the Credit and Sovereign Debt Crises. Journal of Banking and Finance, Elsevier, 2015, 50, pp.455-474. ⟨hal-01161670⟩

Share

Metrics

Record views

121