This paper is the first to show that financial institutions may be effectively undercapitalized as a result of incomplete consolidation of minority ownership. Using two approaches – consolidating the minority-owned affiliates with the parent or deducting equity investments in minority...

Loan loss provisions in the euro area are negatively related to GDP growth, i.e., they are procyclical. Loan loss provisions tend to be more procyclical at larger and better capitalized banks. The procyclicality of loan loss provisions can explain about two-thirds of the variation of bank...

For an international sample of banks, we construct measures of a bank's absolute size and its systemic size defined as size relative to the national economy. We then examine how a bank's risk and return, its activity mix and funding strategy, and the extent to which it faces market discipline...