Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/185867
Authors: 
Rime, Bertrand
Year of Publication: 
2007
Citation: 
[Journal:] Swiss Journal of Economics and Statistics [ISSN:] 2235-6282 [Volume:] 143 [Year:] 2007 [Issue:] 1 [Pages:] 49-65
Abstract: 
This paper evaluates the reduction of credit risk that can be achieved in Switzerland by a national diversification of bank lending. Using a credit risk model based on corporate default rates, I find that the risk of a nationally diversified loan portfolio is up to 20% smaller than the sum of the risks of regional portfolios. From a financial stability perspective, this substantial risk diversification potential should motivate particular scrutiny on the more than hundred Swiss banks staying on the regional business model.
Subjects: 
diversification
economic capital
consolidation
JEL: 
G21
G28
G31
Persistent Identifier of the first edition: 
Creative Commons License: 
https://creativecommons.org/licenses/by/4.0/
Document Type: 
Article

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