Do weak supervisory systems encourage bank risk-taking?

@inproceedings{Buch2008DoWS,
  title={Do weak supervisory systems encourage bank risk-taking?},
  author={Claudia M. Buch and Gayle DeLong},
  year={2008}
}
Weak bank supervision could give banks the ability to shift risk from themselves to supervisors. We use cross-border bank mergers as a natural experiment to test changes in risk and the impact of supervision. We examine cross-border bank mergers and find that the supervisory structures of the partners' countries influence changes in post-merger total risk. An acquirer from a country with strong supervision lowers total risk after a cross-border merger. However, total risk increases when the… CONTINUE READING

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