Are financial holding companies' subsidiaries riskier than bank holding companies' affiliates?

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  • Author(s): Cuong, Ly Kim (AUTHOR)
  • Source:
    International Review of Economics & Finance. Nov2021, Vol. 76, p1025-1033. 9p.
  • Additional Information
    • Subject Terms:
      BANK holding companies; SUBSIDIARY corporations; HOLDING companies; FINANCIAL risk; RISK exposure
    • Abstract:
      This paper compares the insolvency risk of financial holding companies' subsidiaries and bank holding companies' subsidiaries in the U.S. The presented findings show that financial holding companies' affiliates tend to engage in more risk-taking behaviour than bank holding companies' affiliates. Our results suggest a diversification discount in the complex structure of the financial holding company at the subsidiary level. The regulator should take into account the increased risk exposure of financial holding companies' structures to stabilize the banking system. [ABSTRACT FROM AUTHOR]
    • Abstract:
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