Originators, traders, neutrals, and traditioners – various banking business models across the globe. Does the business model matter for financial stability?

摘要

Why were some banks heavily affected by mortgage crises, while others barely? Why were some banking sectors dominated by “originate and distribute” model, while others were trading? Why did some banks decide not to follow the others, and preferred to stay traditional banks? How the models chosen by banks translated into their risk-return profiles? And finally, which banking model makes the world safer? This article raises these issues. It shows that heterogeneity in the banking industry before the mortgage crisis was huge. We document that institutional factors were largely responsible for the development of individual banking models in single countries. We find that the most risky banking model is when banks specialize in trading and do not diversify. Therefore, the most “optimal” from risk-return profile seems to be the “balanced” model. The traditional model though appears as systemically the least risky, it does not allow banks to achieve sufficient return.