1 December 2020
CenSE member Dr Fernando Moreira has recently had a paper on the relation between amount of capital and risk-taking published in a major financial journal.
Dr Fernando Moreira's paper, Financial Institutions' Funding Cost: Do capital and risk-taking matter?, has just been accepted for publication in the Journal of Risk Management in Financial Institutions.
In this study, Fernando shows that the relative amount of capital and risk-taking compared to peers has influence on the funding cost of financial institutions. This suggests that these two factors could work as tools for achieving financial stability by means of self-regulatory practices, given that financial institutions would have incentives to increase capital and refrain from taking excessive risk.