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Has bank holding companies' diversification affected their risk of failure?

1987; Elsevier BV; Volume: 39; Issue: 4 Linguagem: Inglês

10.1016/0148-6195(87)90025-7

1879-1735

Larry D. Wall,

Banking stability, regulation, efficiency

The effect of nonbank activities on the riskiness of banking organizations is an important issue in capital regulation and deciding whether banking firms should be allowed to perform additional activities. This paper explores the potential effect of deregulation by examining the effect of existing nonbank subsidiaries on the riskiness of bank holding companies. The results provide no evidence to suggest that deregulation would increase banking organizations' risk and weak evidence that deregulation might decrease risk.