Financial Frictions, Bank Efficiency and Risk: Evidence from the Eurozone
用联立方程模型研究欧元区商业银行的金融摩擦、效率与风险关系，发现低效率预示贷款质量差，且限制银行开放度可能促使管理层选择高风险投资。
Abstract: This paper employs a simultaneous equations approach to investigate the dynamics between financial frictions, efficiency and risk for eurozone's commercial banks. We consider two related channels through which financial frictions may arise: informational and market structure imperfections, and allow for a possible reverse causation from efficiency to banks’ asset quality. The findings validate the presence of both channels of financial frictions and are consistent with the efficiency‐lending quality hypothesis that low efficiency signals poor asset quality loans. Finally, our findings suggest that policies aimed at constraining banks’ degree of openness may ultimately direct management choices towards riskier investments.