Risky Business: Institutional Logics and Risk Taking at Large U.S. Commercial Banks.

ABSTRACT:

Objective

This article aims to answer whether increased securitization and/or increased shareholder value pressures at commercial banks have led to higher levels of risk.

Methods

Using data on large U.S. commercial banks from several sources, I estimate linear partial-adjustment models to predict the effects of securitization, as well as CEO incentives to increase shareholder value, on leverage.

Results

These models provide evidence that increases in the relative size of trading securities at a commercial bank are significantly associated with increases in leverage. Meanwhile, the relative size of total securities and CEO incentives to increase shareholder value do not appear to affect leverage.

Conclusion

These findings suggest that limiting commercial bank sp

SUBMITTER: LaBriola J 

PROVIDER: S-EPMC6788859 | biostudies-literature | 2019 Feb

REPOSITORIES: biostudies-literature