Bank Activity and Funding Strategies : The Impact on Risk and Returns

Demirgüç-Kunt, Asli; Huizinga, Harry

dc.creator	Demirgüç-Kunt, Asli
dc.creator	Huizinga, Harry
dc.date	2012-03-19T19:08:45Z
dc.date	2012-03-19T19:08:45Z
dc.date	2009-02-01
dc.date.accessioned	2023-02-17T21:07:59Z
dc.date.available	2023-02-17T21:07:59Z
dc.identifier	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090211150244
dc.identifier	http://hdl.handle.net/10986/4033
dc.identifier.uri	http://localhost:8080/xmlui/handle/CUHPOERS/245003
dc.description	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.
dc.language	English
dc.relation	Policy Research Working Paper ; No. 4837
dc.rights	CC BY 3.0 IGO
dc.rights	http://creativecommons.org/licenses/by/3.0/igo/
dc.rights	World Bank
dc.subject	ACCOUNTING
dc.subject	AGENCY PROBLEMS
dc.subject	ANNUAL INFLATION RATE
dc.subject	ANNUAL STATEMENTS
dc.subject	ASSET GROWTH
dc.subject	ASSET RATIO
dc.subject	ASSET-LIABILITY MATCHING
dc.subject	ASSETS RATIO
dc.subject	BALANCE SHEET
dc.subject	BANK ACTIVITIES
dc.subject	BANK ACTIVITY
dc.subject	BANK ASSETS
dc.subject	BANK CAPITALIZATION
dc.subject	BANK CREDIT
dc.subject	BANK CUSTOMERS
dc.subject	BANK DATA
dc.subject	BANK DEPOSITS
dc.subject	BANK EQUITY
dc.subject	BANK FUNDING
dc.subject	BANK HOLDING
dc.subject	BANK HOLDING COMPANIES
dc.subject	BANK HOLDING COMPANY
dc.subject	BANK INTERMEDIATION
dc.subject	BANK LENDING
dc.subject	BANK LIQUIDITY
dc.subject	BANK LOANS
dc.subject	BANK MERGERS
dc.subject	BANK POLICY
dc.subject	BANK RATE
dc.subject	BANK REGULATION
dc.subject	BANK REGULATIONS
dc.subject	BANK RISK
dc.subject	BANK RUN
dc.subject	BANK SUPERVISION
dc.subject	BANKING MODELS
dc.subject	BANKING SECTOR
dc.subject	BANKRUPTCY
dc.subject	BANKS
dc.subject	BORROWINGS
dc.subject	BUSINESS CYCLE
dc.subject	CAPITAL ALLOCATION
dc.subject	CAPITAL ASSETS
dc.subject	CAPITAL MARKET
dc.subject	CAPITAL MARKETS
dc.subject	CAPITAL REQUIREMENTS
dc.subject	CDS
dc.subject	CENTRAL BANK
dc.subject	CERTIFICATES OF DEPOSIT
dc.subject	CHECKS
dc.subject	COMMERCIAL BANK
dc.subject	COMMERCIAL BANKING
dc.subject	COMMERCIAL BANKS
dc.subject	COMPOSITION OF DEBT
dc.subject	CONFLICT OF INTEREST
dc.subject	CONSUMER
dc.subject	CONTRIBUTION
dc.subject	CONVERSIONS
dc.subject	COOPERATIVE BANKS
dc.subject	CORE DEPOSITS
dc.subject	CORPORATE GOVERNANCE
dc.subject	COST STRUCTURE
dc.subject	COUNTRY FIXED EFFECTS
dc.subject	CREDIT INSTITUTION
dc.subject	CREDIT INSTITUTIONS
dc.subject	CREDITORS
dc.subject	CREDITWORTHINESS
dc.subject	DEBT
dc.subject	DEPENDANT
dc.subject	DEPOSIT
dc.subject	DEPOSIT FUNDING
dc.subject	DEPOSIT INSURANCE
dc.subject	DEPOSIT INTEREST
dc.subject	DEPOSIT INTEREST RATES
dc.subject	DEPOSITORS
dc.subject	DEPOSITS
dc.subject	DEVELOPING COUNTRIES
dc.subject	DEVELOPING COUNTRY
dc.subject	DIVERSIFICATION BENEFITS
dc.subject	DIVERSIFIED INCOME
dc.subject	DIVIDEND
dc.subject	DIVIDEND PAYMENTS
dc.subject	DUMMY VARIABLES
dc.subject	EARNING ASSETS
dc.subject	EARNINGS
dc.subject	ECONOMIC CONDITIONS
dc.subject	ECONOMIC DEVELOPMENT
dc.subject	EXPOSURE
dc.subject	FACTORS OF PRODUCTION
dc.subject	FEDERAL RESERVE
dc.subject	FEDERAL RESERVE BANK
dc.subject	FEDERAL RESERVE BANK OF NEW YORK
dc.subject	FEE INCOME
dc.subject	FINANCIAL ACTIVITIES
dc.subject	FINANCIAL CONGLOMERATES
dc.subject	FINANCIAL CRISIS
dc.subject	FINANCIAL DEVELOPMENT
dc.subject	FINANCIAL INSTITUTION
dc.subject	FINANCIAL INSTITUTIONS
dc.subject	FINANCIAL INTERMEDIATION
dc.subject	FINANCIAL MARKET
dc.subject	FINANCIAL SAFETY NET
dc.subject	FINANCIAL SERVICE
dc.subject	FINANCIAL SERVICES
dc.subject	FINANCIAL SERVICES INDUSTRY
dc.subject	FINANCIAL STUDIES
dc.subject	GROSS DOMESTIC PRODUCT
dc.subject	GROWTH RATE
dc.subject	HIGH INTEREST RATE
dc.subject	INCOME INCREASES
dc.subject	INCOME STREAM
dc.subject	INCOME STREAMS
dc.subject	INCOME-GENERATING ACTIVITIES
dc.subject	INFLATION
dc.subject	INFLATION RATE
dc.subject	INSTITUTIONAL DEVELOPMENT
dc.subject	INSTITUTIONAL ENVIRONMENT
dc.subject	INSTRUMENT
dc.subject	INSURANCE
dc.subject	INSURED DEPOSITS
dc.subject	INTEREST INCOME
dc.subject	INTEREST INCOMES
dc.subject	INTEREST RATE
dc.subject	INTEREST RATES
dc.subject	INTERNATIONAL BANK
dc.subject	INTERNATIONAL BANKS
dc.subject	INVESTMENT BANK
dc.subject	INVESTMENT BANKING
dc.subject	INVESTMENT BANKS
dc.subject	ISLAMIC BANKS
dc.subject	LEGAL PROTECTION
dc.subject	LEGAL SYSTEM
dc.subject	LIABILITY
dc.subject	LIABILITY SIDE
dc.subject	LIQUID ASSETS
dc.subject	LIQUIDATION
dc.subject	LIQUIDITY CRISIS
dc.subject	LIQUIDITY MANAGEMENT
dc.subject	LOAN
dc.subject	LONG-TERM INSTRUMENTS
dc.subject	MACROECONOMIC CONTROL
dc.subject	MACROECONOMIC CONTROLS
dc.subject	MACROECONOMIC DATA
dc.subject	MACROECONOMIC ENVIRONMENT
dc.subject	MACROECONOMIC VARIABLES
dc.subject	MARKET ENVIRONMENT
dc.subject	MARKET INTEREST
dc.subject	MARKET INTEREST RATES
dc.subject	MARKET VALUATION
dc.subject	MARKET VALUATIONS
dc.subject	MARKET VALUE
dc.subject	MINIMUM CAPITAL REQUIREMENTS
dc.subject	MINORITY SHAREHOLDER
dc.subject	MINORITY SHAREHOLDER PROTECTION
dc.subject	MONEY MARKET
dc.subject	MONEY MARKET INSTRUMENTS
dc.subject	MONEY MARKET RATES
dc.subject	MORTGAGE BANKS
dc.subject	MORTGAGE-BACKED SECURITIES
dc.subject	OPERATING INCOME
dc.subject	OVERHEAD COSTS
dc.subject	POLITICAL ECONOMY
dc.subject	POSITIVE COEFFICIENT
dc.subject	POSITIVE COEFFICIENTS
dc.subject	PRESENT VALUE
dc.subject	PROBABILITY
dc.subject	PROFITABILITY
dc.subject	RATE OF INFLATION
dc.subject	RATE OF RETURN
dc.subject	RATES OF RETURN
dc.subject	REAL ESTATE
dc.subject	REAL ESTATE MORTGAGE
dc.subject	REGULATORS
dc.subject	REGULATORY OVERSIGHT
dc.subject	REGULATORY RESTRICTIONS
dc.subject	RESEARCH ASSISTANCE
dc.subject	RETAIL BANK
dc.subject	RETURN ON ASSETS
dc.subject	RETURN ON EQUITY
dc.subject	RETURNS
dc.subject	RISK DIVERSIFICATION
dc.subject	RISK REDUCTION
dc.subject	RISK TAKING
dc.subject	SAFETY NET
dc.subject	SAVINGS
dc.subject	SAVINGS BANKS
dc.subject	SECURITIES
dc.subject	SECURITIES MARKETS
dc.subject	SHARE OF INVESTMENT
dc.subject	SHAREHOLDER
dc.subject	SHAREHOLDER RIGHTS
dc.subject	SHAREHOLDERS
dc.subject	SHAREHOLDERS RIGHTS
dc.subject	SHORT-TERM BONDS
dc.subject	SHORT-TERM INSTRUMENTS
dc.subject	SOLVENCY
dc.subject	STOCK EXCHANGE
dc.subject	STOCK EXCHANGE LISTING
dc.subject	STOCK MARKET
dc.subject	STOCK PRICE
dc.subject	STOCK PRICES
dc.subject	STOCK RETURN
dc.subject	STOCK RETURNS
dc.subject	SUBORDINATED DEBT
dc.subject	SUBSIDIARIES
dc.subject	SUPERVISORY AGENCY
dc.subject	SUPERVISORY AUTHORITIES
dc.subject	TAX
dc.subject	TRADING
dc.subject	TRADING ACTIVITIES
dc.subject	TRADING INCOME
dc.subject	TRADITIONAL BANKING
dc.subject	UNION
dc.subject	UNIVERSAL BANKING
dc.subject	VALUATION
dc.subject	VALUATIONS
dc.subject	VOLATILITY
dc.subject	WHOLESALE FUNDING
dc.subject	WORLD DEVELOPMENT INDICATORS
dc.title	Bank Activity and Funding Strategies : The Impact on Risk and Returns
dc.type	Publications & Research :: Policy Research Working Paper