IDEAS home Printed from https://ideas.repec.org/a/eee/intfin/v60y2019icp193-210.html
   My bibliography  Save this article

Wealth inequality and bank failure: A cross-country simulation analysis

Author

Listed:
  • Tzur, Joseph
  • Jacobi, Arie

Abstract

Assuming potential borrowers arrive randomly and sequentially at the bank, and the fair value assets change with the economy's state, we show, by extensive simulation, that in countries with a high level of wealth inequality, an increment in the upper bound of the wealth distribution may increase the probability of bank failure; Also, the average total amount of loans and the average net income of the bank increase. If wealth inequality is low and a bank has low screening capacity, then the probability of bank failure increases. This is enhanced when the bank adopts a higher level of perceived risk.

Suggested Citation

  • Tzur, Joseph & Jacobi, Arie, 2019. "Wealth inequality and bank failure: A cross-country simulation analysis," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 60(C), pages 193-210.
    • Handle: RePEc:eee:intfin:v:60:y:2019:i:c:p:193-210
    DOI: 10.1016/j.intfin.2018.12.017
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1042443118304438
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.intfin.2018.12.017?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jacobi, Arie & Tzur, Joseph, 2021. "Wealth Distribution across Countries: Quality of Weibull, Dagum and Burr XII in Estimating Wealth over Time," Finance Research Letters, Elsevier, vol. 43(C).
    2. Jacobi, Arie & Tzur, Joseph, 2021. "Wealth distribution and probability of bank failure across countries," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 71(C).
    3. Jacobi, Arie & Tzur, Joseph, 2019. "Optimal screening capacity and perceived risk of mortgage banks across countries," Emerging Markets Review, Elsevier, vol. 41(C).

    More about this item

    Keywords

    Wealth inequality; Screening capacity; Stress testing; Power law distribution;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:intfin:v:60:y:2019:i:c:p:193-210. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/intfin .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.