@techreport{5d89a87e9c6244f29c862fdf69e9643d,
title = "The Funding of Subsidairies Equity, {"}Double Leverage{"}, and the Risk of Bank Holding Companies (BHC)",
abstract = "“Double leverage” is the circumstance in which the parent company issues debt and acquires shares in the equity of the subsidiaries. We ask whether this type of intra-group financing has got an impact on the risk undertaken by Bank Holding Companies (BHCs). Our view is that, by double leveraging BHCs can exploit a shortfall in the balance sheet capital and are incentivized to assume more risk. Working on a large sample of United States BHCs we observe that the so-called “dou-ble leverage ratio” is positive correlated with risk-taking, while several tools do further suggest the existence of causality. Our outcomes are important for the stability of large banking groups, and give suggestions for a more effective monitoring of their activities.",
keywords = "Bank Holding Companies, Equity Financing, Double Leverage, Risk",
author = "Silvia Bressan",
year = "2015",
month = sep,
day = "2",
doi = "10.2139/ssrn.2516208",
language = "English",
series = "Modul University Working Paper Series",
publisher = "Modul University Vienna GmbH",
number = "3",
address = "Austria",
type = "WorkingPaper",
institution = "Modul University Vienna GmbH",
}