Banks Interconnectivity and Leverage

Arbeitspapier

We show that higher interconnectivity among financial intermediaries induces banks to choose more leverage. Although this leads to higher investment growth, the banking sector becomes more vulnerable to aggregate shocks (crises). We also show that learning about the likelihood of a crisis could have played an important role in generating the high interconnectivity and leverage before the 2008 crisis and the drastic reversal after the crisis. Using balance sheet data for over 14,000 financial intermediaries in 30 OECD countries we find that there is a strong positive correlation between our proxy for interconnectivity and leverage, consistent with the model.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Document de travail ; No. 2018-05

Klassifikation und Themen

• Klassifikation: Wirtschaft

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Barattieri, Alessandro ; Moretti, Laura ; Quadrini, Vincenzo
• Ereignis: Veröffentlichung
• (wer): Université du Québec à Montréal, École des sciences de la gestion (ESG UQAM), Département des sciences économiques
• (wo): Montréal
• (wann): 2018

Weitere Informationen

• Handle: http://hdl.handle.net/10419/234760
• Letzte Aktualisierung: 20.09.2024, 08:23 MESZ