In this paper, we analyzed the role of banks' traditional lending on systemic stability. Firstly, we quantied the effect of correlation among banks' results on systemic risk through Monte Carlo simulation. Secondly, we verified how traditional lending affects banks' results correlation.Finally, combining the two effects, we assessed the importance of bank traditional lending on financial stability. Our results suggest that banks devoting a higher share of their assets totraditional lending show a lower correlation of their comprehensive income, thus having amitigation effect on systemic stability.

Zedda, S., Patane', M., Miggiano, L. (2020). On the importance of traditional lending activity for banking systems stability. JOURNAL OF FINANCIAL MANAGEMENT, MARKETS AND INSTITUTIONS, 8(2) [10.1142/S2282717X2050005X].

On the importance of traditional lending activity for banking systems stability

Stefano Zedda;Michele Patané;Luana Miggiano
2020-01-01

Abstract

In this paper, we analyzed the role of banks' traditional lending on systemic stability. Firstly, we quantied the effect of correlation among banks' results on systemic risk through Monte Carlo simulation. Secondly, we verified how traditional lending affects banks' results correlation.Finally, combining the two effects, we assessed the importance of bank traditional lending on financial stability. Our results suggest that banks devoting a higher share of their assets totraditional lending show a lower correlation of their comprehensive income, thus having amitigation effect on systemic stability.
2020
Zedda, S., Patane', M., Miggiano, L. (2020). On the importance of traditional lending activity for banking systems stability. JOURNAL OF FINANCIAL MANAGEMENT, MARKETS AND INSTITUTIONS, 8(2) [10.1142/S2282717X2050005X].
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11365/1124512