Creditor rights, information sharing, and bank risk taking

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journal

279 Scopus Citations
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Author(s)

  • Joel F. Houston
  • Chen Lin
  • Ping Lin
  • Yue Ma

Related Research Unit(s)

Detail(s)

Original languageEnglish
Pages (from-to)485-512
Journal / PublicationJournal of Financial Economics
Volume96
Issue number3
Publication statusPublished - Jun 2010

Abstract

Looking at a sample of nearly 2,400 banks in 69 countries, we find that stronger creditor rights tend to promote greater bank risk taking. Consistent with this finding, we also show that stronger creditor rights increase the likelihood of financial crisis. On the plus side, we find that stronger creditor rights are associated with higher growth. In contrast, we find that the benefits of information sharing among creditors appear to be universally positive. Greater information sharing leads to higher bank profitability, lower bank risk, a reduced likelihood of financial crisis, and higher economic growth. © 2010 Elsevier B.V.

Research Area(s)

  • Bank risk taking, Creditor rights, Economic growth, Financial crisis, Information sharing

Citation Format(s)

Creditor rights, information sharing, and bank risk taking. / Houston, Joel F.; Lin, Chen; Lin, Ping; Ma, Yue.

In: Journal of Financial Economics, Vol. 96, No. 3, 06.2010, p. 485-512.

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journal