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Are financial holding companies' subsidiaries riskier than bank holding companies’ affiliates?

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  • Cuong, Ly Kim

Abstract

This paper compares the insolvency risk of financial holding companies' subsidiaries and bank holding companies' subsidiaries in the U.S. The presented findings show that financial holding companies' affiliates tend to engage in more risk-taking behaviour than bank holding companies' affiliates. Our results suggest a diversification discount in the complex structure of the financial holding company at the subsidiary level. The regulator should take into account the increased risk exposure of financial holding companies’ structures to stabilize the banking system.

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  • Cuong, Ly Kim, 2021. "Are financial holding companies' subsidiaries riskier than bank holding companies’ affiliates?," International Review of Economics & Finance, Elsevier, vol. 76(C), pages 1025-1033.
    • Handle: RePEc:eee:reveco:v:76:y:2021:i:c:p:1025-1033
    DOI: 10.1016/j.iref.2021.07.019
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    More about this item

    Keywords

    Insolvency risk; Financial holding companies' affiliates; Bank holding companies' affiliates; The U.S;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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