This paper uses Bayesian model averaging (BMA) techniques to examine the driving factors of equity returns of U.S. financial institutions. The main advantage of BMA is accounting for model uncertainty. For the period 1986-2010, we fi nd that the most likely model explaining banking sector...

We show that the effect of diversification on systemic risk exposures varies with bank size and a country's institutional setting. Non-interest income reduces large banks' systemic risk exposures, whereas it increases that of small banks. However, exploiting heterogeneity in countries'...

This paper offers evidence that bank managers adjust key strategic variables following a risk and/or valuation signal. Banks receive a risk signal when they have a substantially higher volatility compared to the best performing bank(s) with similar business model characteristics, and a valuation...

This paper shows that, when the price of emission allowances is sufficiently high, emission trading schemes improve the emission efficiency of highly polluting firms. The efficiency gain comes from a relative decrease in emissions rather than a relative increase in operating revenue. Part of the...