<abstract xmlns="http://www.w3.org/1999/xhtml">

<p>This study explores the impact of investment, financial, and trade freedom on banks' risk-taking and stability of US banks by employing two-step system GMM approach over the extended period from 2002 to 2018. The findings provide evidence that financial freedom decreases risk-taking, while investment and trade freedom increase US larger banks' risk-taking. The results show that investment and trade freedom is beneficial for the stability of banks in the US. The heterogeneity in results indicates that financial freedom reduces the risk-taking, whereas trade and investment freedom increase the risk-taking of well-capitalized and high liquid banks. In contrast, in the case of undercapitalized and low liquid banks, the impact of financial, trade, and investment freedom on risk-taking is insignificant. The result demonstrates that the government's intervention is decisive in developing the degree of economic freedom for the financial system's stability. The finding of the study has practical implications for banks manager, regulators, and policymakers.</p>
</abstract>

This study explores the impact of investment, financial, and trade freedom on banks' risk-taking and stability of US banks by employing two-step system GMM approach over the extended period from 2002 to 2018. The findings provide evidence that financial freedom decreases risk-taking, while investment and trade freedom increase US larger banks' risk-taking. The results show that investment and trade freedom is beneficial for the stability of banks in the US. The heterogeneity in results indicates that financial freedom reduces the risk-taking, whereas trade and investment freedom increase the risk-taking of well-capitalized and high liquid banks. In contrast, in the case of undercapitalized and low liquid banks, the impact of financial, trade, and investment freedom on risk-taking is insignificant. The result demonstrates that the government's intervention is decisive in developing the degree of economic freedom for the financial system's stability. The finding of the study has practical implications for banks manager, regulators, and policymakers.

Impact of Investment, Financial and Trade Freedom on Bank’s Risk-Taking

Studies in Business and Economics

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

{"article-title":"Impact of Investment, Financial and Trade Freedom on Bank\u2019s Risk-Taking"}

This study explores the impact of investment, financial, and trade freedom on banks' risk-taking and stability of US banks by employing two-step system GMM...

Impact of Investment, Financial and Trade Freedom on Bank’s Risk-Taking

Publié en ligne: 24 janv. 2022

Pages: 5 - 23

DOI: https://doi.org/10.2478/sbe-2021-0041

Mots clés
Bank Portfolio Risk, Financial Freedom, Investment Freedom, and Trade Freedom

© 2021 Abbas Faisal, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Impact of Investment, Financial and Trade Freedom on Bank’s Risk-Taking

Publié en ligne: 24 janv. 2022

Pages: 5 - 23

DOI: https://doi.org/10.2478/sbe-2021-0041

Mots clésBank Portfolio Risk, Financial Freedom, Investment Freedom, and Trade Freedom

© 2021 Abbas Faisal, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Mots clés
Bank Portfolio Risk, Financial Freedom, Investment Freedom, and Trade Freedom