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Systemic Risk: Bank Characteristics Matter

Author

Listed:
  • Sharif Mazumder

    (Northern Kentucky University
    Oklahoma State University)

  • Louis R. Piccotti

    (Oklahoma State University)

Abstract

We systematically examine the relationship between a bank’s characteristics and its exposure to systemic risk. We find that tier 1 requirements are negatively associated with a bank’s exposure, while size has a positive association. This association is nonlinear because larger banks contribute more than their smaller competitors. Banks with greater financial constraints are less exposed to systemic risk. We find evidence that geographic distance between banks has a negative relationship with systemic risk and that institutional ownership has a positive one. Finally, we find that the risk-taking attributes of the board and the CEO have a positive association with systemic risk.

Suggested Citation

  • Sharif Mazumder & Louis R. Piccotti, 2023. "Systemic Risk: Bank Characteristics Matter," Journal of Financial Services Research, Springer;Western Finance Association, vol. 64(2), pages 265-301, October.
    • Handle: RePEc:kap:jfsres:v:64:y:2023:i:2:d:10.1007_s10693-022-00386-z
    DOI: 10.1007/s10693-022-00386-z
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    More about this item

    Keywords

    Systemic risk; Financial contagion; Corporate finance; Corporate governance;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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