Erschienen in:Paolo Baffi Centre Research Paper ; No. 2009-52
Umfang:
1 Online-Ressource (30 p)
Sprache:
Englisch
DOI:
10.2139/ssrn.1428806
Identifikator:
Entstehung:
Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments June 1, 2009 erstellt
Beschreibung:
Using a unique data set on bank distress, this paper provides novel empirical evidence on the determinants of bank soundness in the European Union (EU) as a whole. Estimation results support the hypothesis that bank risks have converged across EU members, providing empirical justification for introduction of the pan-European system of financial regulation. We show that asset quality and earning profile of banks are important determinants of bank distress next to leverage, and should be taken into account when designing new financial regulation in the EU. Market discipline both on the side of depositors and stock market participants plays role in the EU, supporting the notion that transparency and dissemination of financial information would contribute to the financial soundness of banks. We also provide evidence in favor of contagion effects, relatively higher fragility of concentrated banking sectors, and hazards associated with high share of wholesale funding