Josef Korte

Risk Targeting and Policy Illusions - Evidence from the Announcement of the Volcker Rule

We analyze the Volcker Rule’s announcement effects on U.S. bank holding companies. In line with the rule and the banks’ public compliance announcements, we find that those banks that are affected by the Volcker Rule already reduced their trading books relative to their total assets 2.34% more than other banks. However, the announcement of the rule did not reduce the banks’ overall risk taking. To keep their risk targets, the affected banks raised the riskiness of their asset returns. We also find some evidence that the affected banks raised their trading risk and decreased the hedging of their banking business. Data, as supplemental material, are available at https://doi.org/10.1287/mnsc.2016.2583. This paper was accepted by Gustavo Manso, finance.

Between Capture and Discretion - The Determinants of Distressed Bank Treatment and Expected Government Support

In this paper, we analyze how sources of political influence relate to the actual regulatory treatment of distressed banks and to the expectation of bank support provided by the government. We assemble a unique dataset that links U.S. banks JEL Classification: D72, G21, G28