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J. Risk Financial Manag. 2016, 9(3), 9; doi:10.3390/jrfm9030009

The Nexus between Social Capital and Bank Risk Taking

1
Institute of International Business, Shanghai University of International Business and Economics, Shanghai 200000, China
2
Department of Economics, Hong Kong Baptist University, Hong Kong
3
School of International Business Administration, Shanghai University of Finance and Economics, 777 Guoding Road, Shanghai 200000, China
4
Department of Economics and Lau Chor Tak Institute of Global Economics and Finance, The Chinese University of Hong Kong, Hong Kong
5
Department of International Economics and Trade, Nanjing University, Nanjing 210000, China
*
Author to whom correspondence should be addressed.
Academic Editor: Michael McAleer
Received: 10 May 2016 / Revised: 4 July 2016 / Accepted: 14 July 2016 / Published: 29 July 2016
(This article belongs to the Special Issue Financial Stability and Regulation / Basel III)
View Full-Text   |   Download PDF [819 KB, uploaded 29 July 2016]   |  

Abstract

This study explores social capital and its relevance to bank risk taking across countries. Our empirical results show that the levels of bank risk taking are lower in countries with higher levels of social capital, and that the impact of social capital is mainly reflected by the reduced value of the standard deviation of return on assets. Moreover, the impact of social capital is found to be weaker when the legal system lacks strength. Furthermore, the study considers the impacts of social capital of the banks’ largest shareholders in these countries and finds that high levels of social capital present in these countries exert a negative effect on bank risk taking, but the effect is not strongly significant. View Full-Text
Keywords: social capital; bank risk taking; trust social capital; bank risk taking; trust
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This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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Xie, W.; Ding, H.; Chong, T.T.-L. The Nexus between Social Capital and Bank Risk Taking. J. Risk Financial Manag. 2016, 9, 9.

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