Size, Risk, and Governance in European Banking

ISBN : 9780199694891

Jens Hagendorff; Kevin Keasey; Francesco Vallascas
280 Pages
162 x 240 mm
Pub date
Oct 2013
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The financial crisis that erupted in 2007 has brought the issues of the size, risk, and regulation of banks to the attention of a wide audience. It is difficult to open a broadsheet newspaper or a business magazine without being confronted with some aspect of bank behaviour, be it their risk levels, bankers' excessive rewards, the intertwining of bank and sovereign risk, or how they should be regulated to avoid problems in the future. In Europe, the recent and on-going crisis has demonstrated that the European Union (EU) was institutionally ill-prepared to manage a financial crisis, especially one involving large cross-border institutions which are systemically important to a number of countries. This book aims at integrating and synthesizing the various perspectives on the size, risk, and governance of banking as applied to the European markets, providing fresh insights and new analysis of the empirical data. The book is divided into three main sections. The first provides an overview of how the size of banking firms affects stability in the European banking sector, reviewing the quantitative empirical literature and offering new insights as to whether bank size motivates risk-taking where explicit or implicit 'too-big-to fail' policies shield bank creditors from market discipline. The next section discusses the debates relating to each of the different elements of risk in European banking, including new insights from a large dataset of European bank risk in different institutional contexts. The third section focuses on regulation, board monitoring, and opacity in European banking, employing a unique and hand collected dataset on the governance of European banks, as well as data on U.S. banks as a benchmark. The final chapter critically reviews the new insights gained from the chapters above, while offering policy implications as regards the role of size, risk and governance in European banking.


1. Introduction
2. Bank Systemic Size and Systemic Crises
3. Increases in Size and Bank Default Risk: Evidence from European Bank Mergers
4. The Trends and Composition of Banking Risk across Europe
5. The Determinants of European Bank Exposure to Systemic Shocks
6. Board Monitoring, Regulation and Performance in the European Banking Industry
7. Executive Pay and Risk-taking in the European Banking Industry
8. Systemic Risk Potential and Opacity in European Banks
9. Conclusions

About the author: 

Jens Hagendorff is the Martin Currie Professor in Finance and Investment at the University of Edinburgh Business School. He has previously worked at the Financial Stability Department of The Bank of Spain, The University of Leeds, and he was also a visiting fellow at the Federal Reserve Bank of Atlanta. Jens' work on European banking has been published in highly-rated international journals such as Review of Finance, Journal of Corporate Finance, Journal of Banking & Finance, and Journal of Financial Services Research. ; Kevin Keasey is Professor of Financial Services, Director of the International Institute of Banking and Financial Services, and Head of the Accounting and Finance Department at the University of Leeds. He is the author of 12 books, monographs, and edited volumes on corporate governance, financial regulation and financial services, small firm finance and financial markets, and behavioural finance, and is the author of over 115 refereed articles in leading international journals and over 80 other publications (book chapters, reports, etc.).; Francesco Vallascas is Associate Professor of Banking and Finance at the University of Leeds. He teaches across a range of subjects in Banking and International Finance. Francesco has previously worked as a Lecturer in Financial Intermediation at the University of Cagliari and with the research centre of the European Commission on several research projects. Francesco' work on banking has been published in highly-rated international journals such as Review of Finance, Journal of Corporate Finance, Journal of Banking & Finance, Journal of International Money & Finance, and Journal of Financial Services Research.

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