Bank liquidity creation and risk-taking: : Does managerial ability matter?

• Autores: P.C. Andreou, Dennis Philips, Peter Robejsek
• Localización: Journal of Business Finance & Accounting, ISSN-e 1468-5957, Vol. 43, Nº. 1-2, 2016, págs. 226-259
• Idioma: inglés
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• Resumen

  • This study investigates the impact of managerial ability on banks' liquidity creation and risk-taking behavior. We find that higher ability managers create more liquidity and take more risk. During times of financial crisis, however, higher ability bank managers reduce liquidity creation as a way to de-leverage their balance sheets. Our findings inform recent theoretical and empirical studies that investigate determinants of liquidity creation and risk by introducing managerial ability as a prominent antecedent of the banks' intermediation and risk-transforming service. Moreover, this study has policy-related implications, since managerial ability can be quantified as a key performance indicator for prudential supervision of banks and could help regulators to target intervention efforts more purposefully during times of crisis.