Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/202440 
Year of Publication: 
2017
Series/Report no.: 
CASE Working Papers No. 7 (131)
Publisher: 
Center for Social and Economic Research (CASE), Warsaw
Abstract: 
The goal of this study is to identify empirically how country-level development, taking into account the financial and macroeconomic environment, affect the risk profiles of the banking sector in Europe. Through a dataset that covers 3,399 European banks spanning the period 1996-2011, and the methodology of panel regression, the empirical findings document the heterogeneity of banking risk determinants. I examine the implications of bank leverage that manifest itself as spreading and growing instability. The study contributes to and combines the different strands of literature and understanding of the importance of the links between the variables. It also contributes to the literature by focusing on a group of countries from Central and Eastern Europe and the Commonwealth of Independent States that have not been studied before. The extended model provides a causal link between risk in the banking sector and the growth of the financial market and macroeconomy. I apply four measures of country-level development that are available in previous studies: share of foreign ownership in the banking sector; the financial freedom index; the real growth rate; and stock market capitalization. Using these measures, I obtain different results which highlight the fact that the effect of macroeconomic and financial development on banking sector risk-taking is ambiguous.
Subjects: 
banking risk
leverage
financial market
liberalization
economic growth
lending
JEL: 
F36
F65
G21
G32
G33
ISBN: 
978-83-7178-651-8
Document Type: 
Working Paper

Files in This Item:
File
Size
753.32 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.