Financial institutions’ funding cost: Do capital and risk-taking matter?

Research output: Contribution to journalArticlepeer-review

Abstract

This study shows that the relative amount of capital and risk-taking compared to peers has influence on the funding cost of financial institutions. This suggests that these two factors could work as tools for achieving financial stability by means of self-regulatory practices given that financial institutions would have incentives to increase capital and refrain from taking excessive risk. Besides contributing to the policy-making debate on the viability of market discipline in banking regulation, this paper also opens avenues for further investigations in this area.
Original languageEnglish
Pages (from-to)96-106
Number of pages11
JournalJournal of Risk Management in Financial Institutions
Volume14
Issue number1
Publication statusPublished - 1 Dec 2020

Keywords

  • funding cost
  • bank capital
  • risk-taking

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