The impact of political institutions on the risk of foreign banks in Europe

Li, Hongyu (2022) The impact of political institutions on the risk of foreign banks in Europe. MPhil(R) thesis, University of Glasgow.

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This thesis uses data on 899 commercial banks and macroeconomic variables for a total of 28 countries in the EU for the period 2000-2017, prior to Brexit, in order to avoid Covid-19 effects on trade that would bias the results in this thesis. The Z-score is used as the main indicator of bank risk-taking, and Henisz's (2000) political constraint index is used as the main proxy for political institutions to examine how political institutions affect foreign bank risk-taking. In the literature review section, this thesis collates the current state of research and relevant literature in the field of finance in relation to political institutions, commercial banking risks and on EU finance. A brief analysis of the various areas that may be covered by finance in the future is provided. In addition to this, compared to previous studies, this thesis includes a correlation coefficient matrix, a multiple co-integration test, and the reasons for choosing a fixed effects model to further ensure the robustness of the thesis's findings. The main conclusion drawn from the study is that bank risk-taking is significantly higher in countries with well established political systems.

Item Type: Thesis (MPhil(R))
Qualification Level: Masters
Colleges/Schools: College of Social Sciences > Adam Smith Business School > Accounting and Finance
Supervisor's Name: Tsoukas, Prof. Serafeim and Strieborny, Dr. Martin
Date of Award: 2022
Depositing User: Theses Team
Unique ID: glathesis:2022-83155
Copyright: Copyright of this thesis is held by the author.
Date Deposited: 05 Oct 2022 15:30
Last Modified: 05 Oct 2022 15:31
Thesis DOI: 10.5525/gla.thesis.83155

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