European Parliament Library

Risk and the Corporate Structure of Banks

Abstract
We identify different sources of risk as important determinants of banks' corporate structures when expanding into new markets. Subsidiary-based corporate structures benefit from greater protection against economic risk because of affiliate-level limited liability, but are more exposed to the risk of capital expropriation than are branches. Thus, branch-based structures are preferred to subsidiary-based structures when expropriation risk is high relative to economic risk, and vice versa. Greater cross-country risk correlation and more accurate pricing of risk by investors reduce the differences between the two structures. Furthermore, the corporate structure affects bank risk taking and affiliate size
Table Of Contents
Contents; I. Introduction; II. Model; A. Branch Structure; B. Subsidiary Structure; III. Comparison of Corporate Structures; IV. Extensions and Robustness; A. Endogenous Rates of Return on Bank Assets; B. Endogenous Rates on Deposits; C. Bank Risk Taking; V. Discussion and Conclusions; Appendix: Proofs; References
Language
eng
Literary Form
non fiction
Note
"February 2010."
Physical Description
1 online resource (27 p.)
Specific Material Designation
remote
Form Of Item
online
Isbn
9786613873842

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