Bundesbank paper presents new model of banks’ risk-taking

Deutsche Bundesbank headquarters, Frankfurt
The Deutsche Bundesbank
Fabian Stürtz

A working paper published by the Deutsche Bundesbank offers a new model of banks’ decision-making that may explain why profitable lenders take large risks.

In Bank profitability, leverage constraints and risk-taking, Natalya Martynova, Lev Ratnovski, and Razvan Vlahu note that the 2008 financial crisis “revealed a surprising amount of risk-taking in very profitable financial institutions”. They say this behaviour seems to contradict most corporate finance models’ predictions, where shareholders

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact [email protected] or view our subscription options here: http://subscriptions.centralbanking.com/subscribe

You are currently unable to copy this content. Please contact [email protected] to find out more.

To continue reading...

You need to sign in to use this feature. If you don’t have a Central Banking account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here: