How Risky Are Banks' Risk Weighted Assets? : Evidence From the Financial Crisis /

We study how investors account for the riskiness of banks' risk-weighted assets (RWA) by examining the determinants of stock returns and market measures of risk. We find that banks with higher RWA had lower stock returns over the US and European crises. This relationship is weaker in Europe whe...

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Autor principal: Das, Sonali
Altres autors: Sy, Amadou
Format: Revista
Idioma:English
Publicat: Washington, D.C. : International Monetary Fund, 2012.
Col·lecció:IMF Working Papers; Working Paper ; No. 2012/036
Accés en línia:Full text available on IMF
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520 3 |a We study how investors account for the riskiness of banks' risk-weighted assets (RWA) by examining the determinants of stock returns and market measures of risk. We find that banks with higher RWA had lower stock returns over the US and European crises. This relationship is weaker in Europe where banks can use Basel II internal risk models. For large banks, investors paid less attention to RWA and rewarded instead lower wholesale funding and better asset quality. RWA do not, in general, predict market measures of risk although there is evidence of a positive relationship before the US crisis which becomes negative afterwards. 
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700 1 |a Sy, Amadou. 
830 0 |a IMF Working Papers; Working Paper ;  |v No. 2012/036 
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