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| Author: | Hakenes, H. |
| Title: | Banks as delegated risk managers |
| Journal: | Journal of Banking and Finance
2004 : OCT, VOL. 28:10, p. 2399-2426 |
| Index terms: | Banking Risk management Delegation Financial intermediaries Models |
| Language: | eng |
| Abstract: | Although being of major importance in the banking industry in practice, risk management (henceforth as: r-mgmt., for 'r. managers' as: r-mgrs.) plays only a minor role in the theory of banking. This paper puts forward a model in which r-mgrs. endogenously take over typical functions of banks, granting loans, consulting on financial questions, and signing tailor-made hedge transactions. Delegation costs are innately low if banks assume the function of r-mgrs. in an economy. R-mgmt. can be seen as a core competence of banks. |
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