International Lending, Bank Risk and Capital Regulation:Focus versus Diversification

• Main Authors: Wei-Cheng Hung, 洪偉誠
• Other Authors: 林志鴻
• Format: Others
• Language: en_US
• Published: 2009
• Online Access: http://ndltd.ncl.edu.tw/handle/99785877643595485894

碩士 === 淡江大學 === 國際貿易學系國際企業學碩士班 === 97 === This thesis uses an option-based model to examine the relationships among capital regulation, bank risk, and the optimal international lending determination. An increase in the capital-to-deposits ratio decreases the bank’s domestic lending and increases foreign lending when the bank realizes a relatively less risky state of the world. An increase in the bank’s risk-taking incentive increases its domestic lending and decreases foreign lending when the bank realizes a relatively more risky state. Our findings provide alternative explanations concerning the effect of capital regulation on lending diversification and the effect of risk-taking incentive on lending focus.