TY  - GEN
AB  - We investigate the question of whether sophistication in risk management fosters banking stability. We compare a simple banking system in which an average rating is used with a sophisticated banking system in which banks are able to assess the default risk of entrepreneurs individually. Both banking systems compete for deposits, loans, and equity. While a sophisticated system rewards entrepreneurs with low default risks by low loan interest rates, a simple system acquires more equity and finances more entrepreneurs. Expected repayments in a simple system are always higher and its default risk is lower if productivity is sufficiently high.
DA  - 2006
KW  - Risk premia
KW  - Risk management
KW  - Financial intermediation
KW  - Macroeconomic risks
KW  - Banking regulation
KW  - Rating
LA  - eng
PY  - 2006
TI  - Sophistication in risk management and banking stability. The long term
UR  - https://nbn-resolving.org/urn:nbn:de:hbz:361-9707
Y2  - 2024-11-22T06:26:53
ER  -