Diversification at Financial Institutions and Systemic Crises

W.B. Wagner

Diversification at Financial Institutions and Systemic Crises

W.B. Wagner

Research output: Working paper › Discussion paper › Other research output

2281 Downloads (Pure)

Abstract

We show that the diversification of risks at financial institutions has unwelcome effects by increasing the likelihood of systems crises.As a result, complete diversification is not warranted adn the optimal degree of diversification is arbitrarily low.We also identify externalities that cause financial institutions to diversify beyond diversification may thus have reduced welfare.

Original language	English
Place of Publication	Tilburg
Publisher	Macroeconomics
Number of pages	40
Volume	2006-71
Publication status	Published - 2006

Publication series

Name	CentER Discussion Paper
Volume	2006-71

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 1 No Poverty
SDG 8 Decent Work and Economic Growth
SDG 10 Reduced Inequalities

Keywords

diversification
financial consolidation
conglomeration
securitization
system risk

Access to Document

71

Cite this

@techreport{b82d6514e1cb4d36a934ab7fd45fbeb4,

title = "Diversification at Financial Institutions and Systemic Crises",

abstract = "We show that the diversification of risks at financial institutions has unwelcome effects by increasing the likelihood of systems crises.As a result, complete diversification is not warranted adn the optimal degree of diversification is arbitrarily low.We also identify externalities that cause financial institutions to diversify beyond diversification may thus have reduced welfare.",

keywords = "diversification, financial consolidation, conglomeration, securitization, system risk",

author = "W.B. Wagner",

note = "Subsequently published in Journal of Financial Intermediation, 2010 Pagination: 40",

year = "2006",

language = "English",

volume = "2006-71",

series = "CentER Discussion Paper",

publisher = "Macroeconomics",

type = "WorkingPaper",

institution = "Macroeconomics",

}

TY - UNPB

T1 - Diversification at Financial Institutions and Systemic Crises

AU - Wagner, W.B.

N1 - Subsequently published in Journal of Financial Intermediation, 2010 Pagination: 40

PY - 2006

Y1 - 2006

N2 - We show that the diversification of risks at financial institutions has unwelcome effects by increasing the likelihood of systems crises.As a result, complete diversification is not warranted adn the optimal degree of diversification is arbitrarily low.We also identify externalities that cause financial institutions to diversify beyond diversification may thus have reduced welfare.

AB - We show that the diversification of risks at financial institutions has unwelcome effects by increasing the likelihood of systems crises.As a result, complete diversification is not warranted adn the optimal degree of diversification is arbitrarily low.We also identify externalities that cause financial institutions to diversify beyond diversification may thus have reduced welfare.

KW - diversification

KW - financial consolidation

KW - conglomeration

KW - securitization

KW - system risk

M3 - Discussion paper

VL - 2006-71

T3 - CentER Discussion Paper

BT - Diversification at Financial Institutions and Systemic Crises

PB - Macroeconomics

CY - Tilburg

ER -

Diversification at Financial Institutions and Systemic Crises

Abstract

Publication series

UN SDGs

Keywords

Access to Document

Fingerprint

Cite this