Financial institutions’ funding cost: Do capital and risk-taking matter?
Abstract
This study shows that the relative amount of capital and risk-taking compared with peers has influence on the funding cost of financial institutions. This suggests that these two factors could work as tools for achieving financial stability by means of self-regulatory practices given that financial institutions would have incentives to increase capital and refrain from taking excessive risk. Besides contributing to the policy-making debate on the viability of market discipline in banking regulation, this paper also opens avenues for further investigations in this area.
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Author's Biography
Fernando Moreira is a Senior Lecturer (Associate Professor) in Banking and Risk Management and Co-director of the Centre for Service Excellence (CenSE) at the University of Edinburgh Business School. His research interests include the impact of financial regulation on a number of issues (eg economic growth and banks’ risk-taking) and methodological approaches to assess causality. He has previously worked at Keele University (United Kingdom) as a Lecturer in Finance and at the Central Bank of Brazil.
Citation
Moreira, Fernando (2020, December 1). Financial institutions’ funding cost: Do capital and risk-taking matter?. In the Journal of Risk Management in Financial Institutions, Volume 14, Issue 1. https://doi.org/10.69554/QLZK3320.
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