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Micro-level Evidences of Moral Hazard in the European Financial Institutions

In: The Impact of Globalization on International Finance and Accounting

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  • Karel Janda

    (University of Economics, Prague
    Institute of Economic Studies, Charles University)

  • Oleg Kravtsov

    (University of Economics, Prague)

Abstract

This article examines the evidences of moral hazard and the determinants of risk-taking among 500 banks in Central Europe, the Baltic, and Balkan region. We analyze moral hazard incentives and investigate which factors impact the risk profile of the banks in empirical relationships between shareholders, bank managers, regulatory restraints, and ownership structure. We find strong link between level of risk-taking and bank manager performance and efficiency, which supports the theoretical argumentation of the moral hazard. The capital requirements and regulatory concerns exhibit significant effect on the risk-taking behavior. A positive relation between government ownership and risk profile is observed in the dataset.

Suggested Citation

  • Karel Janda & Oleg Kravtsov, 2018. "Micro-level Evidences of Moral Hazard in the European Financial Institutions," Springer Proceedings in Business and Economics, in: David Procházka (ed.), The Impact of Globalization on International Finance and Accounting, pages 89-98, Springer.
    • Handle: RePEc:spr:prbchp:978-3-319-68762-9_10
    DOI: 10.1007/978-3-319-68762-9_10
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    References listed on IDEAS

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