Tying Bank Regulation to Banks’ Risk-Return Trade-Offs Following the Financial Crisis: Holding Congress and its Regulatory Apparatus Accountable

Research background: Since the financial crisis in 2008, numerous other cryptocurrencies have established themselves in the financial industry alongside Bitcoin. Although the validity of the user cases is still lacking, Bitcoin is already being used extensively in the institutional finance sector, among others. Here, the comparison of Bitcoin to other asset classes in mixed portfolio structures must be taken into account. According to the latter, far-reaching areas of investigation emerge by adding Bitcoin in the evaluation of risk-return ratios of mixed portfolio weightings. Purpose of the article: The objective of this paper is to examine, within the framework of Harry Markowitz’s efficiency theory, the impact of including Bitcoin as an investment asset for the risk-return ratios of mixed portfolio structures. Methods: The statistical analysis is based, among other things, on paired sample tests, where the return and volatility values are tested for significant differences in the selected test values. Findings & Value added: The statistical investigations show that the introduction of Bitcoin leads to advantageous return structures, but at the same time to significantly increased volatility values of the examined portfolio constellations. Setting a regional focus of the investment assets in the investigations led to a simplified evaluation basis and at the same time offers the scientific space for further investigations.

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FINANCIAL CRISIS AND LOCAL BANKS: A REVIEW OF BANK-FIRM RELATIONSHIPS IN ITALY

Corporate Ownership and Control ◽

10.22495/cocv14i3c1art10 ◽

2017 ◽

Vol 14 (3) ◽

pp. 249-258 ◽

Cited By ~ 3

Author(s):

Andrea Quintiliani

Keyword(s):

Financial Crisis ◽

Empirical Analysis ◽

Research Question ◽

Banking System ◽

Relationship Lending ◽

Critical Elements ◽

Risk Return ◽

The Impact ◽

The Relationship ◽

The Empirical Analysis

This paper focuses on bank-firm relationship in an economic deeply changing environment. The objectives of the paper are two-fold: to understand, compared to the overall banking system, if the lending activities and economic-financial performances of Italian local banks have changed after the outbreak of the financial crisis; and to understand what are the conditions that allow to develop a model of a local bank capable of supporting the development routes of SMEs, by an appropriate risk/return profile. In order to answer the first research question, the paper presented an empirical analysis, covering the period 2007-2011, of Italian Cooperative Credit Banks (a particular category of local banks) compared with the system of bank groups with operability spread over much of the Italian territory and not. The empirical comparative analysis has the aim to see the effects of the crisis on the relationship bank-firm through the reading of the impact on the dynamics of lending and on the profiles of structure, riskiness, profitability and efficiency of the banks under examination. In order to provide an answer to the second research question, the paper provides some insight of evolutionary nature reflection in the bank-firm relationship. In accordance with the doctrinal postulates of the relationship lending the empirical analysis shows how the financial then real crisis has not induced Cooperative Credit Banks to restrict credit to local firms. The survey evidences have however highlighted some critical elements that are reflected inevitably on the local bank’s risk-return profile. Based only on quantitative data of statement, the empirical analysis represents a limit in this kind of research. This paper is useful to stimulate the debate of experts as well as to focus on the studies of local banks in particular in the light of their anti-cyclic role. Even if abounding in subjects about local banks and relationship lending literature faces only marginally the effects of global crisis on business profiles of local banks.

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