Banking Risk and Bank Size: A Panel Data Analysis in the European Banking Sector (1988-2002) - A Note

Abstract

According to Stever (2007) there is a strong circumstantial evidence that regulators (and/or shareholders) place a limit on the total volatility of each bank’s assets regardless of size. In the present paper by a different approach an attempt will be made to reach the same conclusion (that bank size does not affect total banking risk). It is concluded in the present paper that bank size seems that it does not affect total banking risk in the northern European banks, while in the southern ones it seems that bank size has a positive impact on banking risk. Panel data are annual, are kindly offered by Bloomberg and the panel data analysis is made feasible by means of Eviews software package.

Keywords: Banking Risk, Bank Size, Econometric Models with Panel Data

JEL Classification: E5, G1, G32, C23