XXVI Edition

14-15-16 December 2017"

Restructuring of banks: impact on individual and systemic risk

Hannes Koester, Leuphana University of Lueneburg

This paper analyzes whether bank restructurings threaten or promote the stability of banks and the financial system. Accumulating a unique database that contains hand-collected information on the restructuring expenses of 100 banks between 1999 and 2015 and running panel regressions, this study shows that bank restructuring increases banks’ individual risk. Moreover, banks that are restructured to a considerable extent tend to be more vulnerable to shocks and are more likely to cause greater disruptions to the financial system. Thus, the results provide additional insights for banking authorities to improve their monitoring and regulatory strategies.

Area: Young Economists Session (YES award)

Keywords: Restructuring, Refocusing, Bank fragility, Systemic risk, Individual risk

Paper file

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