The relation between bank liquidity and risk-taking: Empirical evidence from 1999 Financial Services Modernization Act (GLBA)

• Main Authors: Yu-Yi Lee, 李郁儀
• Other Authors: I-Ju Chen
• Format: Others
• Language: en_US
• Online Access: http://ndltd.ncl.edu.tw/handle/j2vk6k

碩士 === 元智大學 === 商學碩士班(財務金融學程) === 102 === In this thesis, we focus on the empirical result of the relationship between bank liquidity and risk taking from 1999 Financial Services Modernization Act. First, we discuss the performance of bank risk and liquidity before and after the GLBA. And then we conduct a stricter regression analysis in order to evaluate the relationship between the bank risk-taking and its idiosyncratic as well as aggregate determinants. We find that banks with higher levels of risk-taking usually have a higher liquid assets ratio and the tendency persisted across the pre and post-GLBA. When bank with higher liquidity, CEO will to invest in additional high-risk plans which making the bank's risk increases, in order to obtain higher compensation. Thus, the relationship of bank liquidity and risk is a positive. However, the S&;P1500 banks have the opposite phenomenon.