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Durham Research Online
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Bank liquidity creation and risk-taking : does managerial ability matter?

Andreou, P. and Philip, D. and Robejsek, P. (2016) 'Bank liquidity creation and risk-taking : does managerial ability matter?', Journal of business finance and accounting., 43 (1-2). pp. 226-259.

Abstract

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 financial crisis times, 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 crisis times.

Item Type:Article
Keywords:Financial institutions, Managerial ability, Liquidity creation, Risk-taking, Financial crisis.
Full text:Publisher-imposed embargo until 14 March 2018.
(AM) Accepted Manuscript
File format - PDF
(658Kb)
Status:Peer-reviewed
Publisher Web site:http://dx.doi.org/10.1111/jbfa.12169
Publisher statement:This is the accepted version of the following article: Andreou, P., Philip, D. and Robejsek, P. (2015). Bank Liquidity Creation and Risk-Taking: Does Managerial Ability Matter? Journal of Business Finance and Accounting. 43(1-2): 226–259, which has been published in final form at http://dx.doi.org/10.1111/jbfa.12169. This article may be used for non-commercial purposes in accordance With Wiley Terms and Conditions for self-archiving.
Record Created:11 Nov 2015 10:05
Last Modified:31 Mar 2016 11:30

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