Arbeitspapier

The marketability of bank assets and managerial rents: implications for financial stability

Ongoing financial innovation and greater information availability increase the tradability of bank assets and reduce banks' dependence on individual bank managers as private information in the lending process declines. In this paper we argue that this has two effects on banks, with opposing implications for banking stability. First, the hold-up problem between bank managers and shareholders becomes less severe. Consequently, banks' capital structure needs to be less concerned with disciplining the management. Deposits -the most effective disciplining device- can be reduced, increasing banks' resilience to adverse return shocks. However, limiting the hold-up problem also diminishes bank managers' rents, reducing their incentives to properly monitor and screen borrowers, with adverse implications for asset quality. Thus, even though the improved marketability of bank assets allows banks to adopt a safer capital structure, the default risk of banks does not necessarily decline.

Sprache
Englisch

Erschienen in
Series: Discussion Paper Series 2 ; No. 2007,12

Klassifikation
Wirtschaft
Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
Banks; Depository Institutions; Micro Finance Institutions; Mortgages
Financial Institutions and Services: Government Policy and Regulation
Thema
Marketability
Incentives
Financial Innovations
Financial Stability
Bank
Bankmanager
Corporate Governance
Agency Theory
Leistungsorientierte Vergütung
Kreditgeschäft
Finanzinnovation
Finanzderivat
Securitization
Moral Hazard
Bankenkrise
Finanzmarktkrise
Theorie

Ereignis
Geistige Schöpfung
(wer)
Fecht, Falko
Wagner, Wolf
Ereignis
Veröffentlichung
(wer)
Deutsche Bundesbank
(wo)
Frankfurt a. M.
(wann)
2007

Handle
Letzte Aktualisierung
10.03.2025, 11:42 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Fecht, Falko
  • Wagner, Wolf
  • Deutsche Bundesbank

Entstanden

  • 2007

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