Search results for "Bank loans"
showing 3 items of 3 documents
Interbank lending and the spread of bank failures: A network model of systemic risk
2012
We model a stylized banking system where banks are characterized by the amount of capital, cash reserves and their exposure to the interbank loan market as borrowers as well as lenders. A network of interbank lending is established that is used as a transmission mechanism for the failure of banks through the system. We trigger a potential banking crisis by exogenously failing a bank and investigate the spread of this failure within the banking system. We find the obvious result that the size of the bank initially failing is the dominant factor whether contagion occurs, but for the extent of its spread the characteristics of the network of interbank loans are most important. These results ha…
Network-Based Computational Techniques to Determine the Risk Drivers of Bank Failures During a Systemic Banking Crisis
2018
This paper employs a computational model of solvency and liquidity contagion assessing the vulnerability of banks to systemic risk. We find that the main risk drivers relate to the financial connections a bank has and the market concentration, apart from the size of the bank triggering the contagion, while balance sheets play only a minor role. We also find that market concentration might facilitate banks to withstand liquidity shocks better while exposing them to larger solvency chocks. Our results are validated through an out-of-sample forecasting that shows that both type I and type II prediction errors are reduced if we include network characteristics in our prediction model.
The impact of corporate characteristics on the financial decisions of companies: Evidence on funding decisions by Italian SMEs
2015
Small and medium enterprises (SMEs) represent a large percentage of the corporate tissue of developed countries, but they do not have adequate attention. In fact, various researchers have focused their studies on larger and well-known companies. This paper aims to investigate the impact of corporate characteristic on the financial choices of SMEs, with a specific focus on agro-food micro companies. Access to finance is vital in business start-up, development and growth for SMEs, all with very different needs and facing different challenges in terms of finance compared to large companies. The lack of equity invested in small enterprises makes them more dependent on other external sources (e.…