"This paper examines the implications of bank activity and short-term funding strategies for bank risk and returns using an international sample of 1,334 banks in 101 countries leading up to the 2007 financial crisis. Expansion into non-interest income generating activities such as trading incr...

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Bibliographic Details

Main Author:	Demirgüç-Kunt, Aslı 1961- (Author)
Format:	Electronic eBook
Language:	English
Published:	[Washington, D.C] World Bank 2009
Series:	Policy research working paper 4837
Subjects:	Banks and banking Financial crises
Online Access:	Volltext
Summary:	"This paper examines the implications of bank activity and short-term funding strategies for bank risk and returns using an international sample of 1,334 banks in 101 countries leading up to the 2007 financial crisis. Expansion into non-interest income generating activities such as trading increases the rate of return on assets, and it may offer some risk diversification benefits at very low levels. Non-deposit, wholesale funding, by contrast, lowers the rate of return on assets, although it can offer some risk reduction at commonly observed low levels of non-deposit funding. A sizeable proportion of banks, however, attract most of their short-term funding in the form of non-deposits at a cost of enhanced bank fragility. Overall, banking strategies that rely prominently on generating non-interest income or attracting non-deposit funding are very risky, which is consistent with the demise of the U.S. investment banking sector. "--World Bank web site
Item Description:	Includes bibliographical references. - Title from PDF file as viewed on 5/8/2009
Physical Description:	1 Online-Ressource
DOI:	10.1596/1813-9450-4837