Risk and the Corporate Structure of Banks

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Price:  $18.00

Release Date: © February, 2010
ISBN : 978-1-45196-290-1
Stock #: WPIEA2010040
Stock Status: On back-order

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We identify different sources of risk as important determinants of banks' corporate structures when expanding into new markets. Subsidiary-based corporate structures benefit from greater protection against economic risk because of affiliate-level limited liability, but are more exposed to the risk of capital expropriation than are branches. Thus, branch-based structures are preferred to subsidiary-based structures when expropriation risk is high relative to economic risk, and vice versa. Greater cross-country risk correlation and more accurate pricing of risk by investors reduce the differences between the two structures. Furthermore, the corporate structure affects bank risk taking and affiliate size.


Corporate governance , Economic policy , Financial institutions and markets , Political economy

More publications in this series: Working Papers