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Details for article 16 of 29 found articles
| Title: |
Multi-bank loan pool contracts: enhancing the profitability of small commercial banks |
| Author: |
Gintschel, Andreas Hackethal, Andreas |
| Appeared in: |
Applied financial economics |
| Paging: | Volume 14 (2004) nr. 17 pages 1239-1252 |
| Year: |
2004-11-15 |
| Contents: |
The study shows that multi-bank loan pool contracts improve the risk-return profile of banks' loan business. Banks write simple contracts on the proceeds from pooled loan portfolios, taking into account the free-rider problems in joint loan production. Thereby especially smaller banks benefit greatly from diversifying credit risk while limiting the efficiency loss due to adverse incentives. Calibration results are presented for a sample of German savings banks: the formation of loan pools reduces the volatility in default rates, proxying for credit risk, of loan portfolios by roughly 80%. Under reasonable assumptions, the gain in return on equity (in certainty equivalent terms) is around 200 basis points annually. |
| Publisher: |
Routledge |
| Source file: |
Elektronische Wetenschappelijke Tijdschriften |
Details for article 16 of 29 found articles
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