Bank mergers improve firms’ access to credit [PhD Ribeiro Guimarães Bonfim, 6 February]

In her dissertation Bonfim explores several dimensions of risk in banking, while also considering its implications on firms’ access to credit. The global economic and financial crisis made clear that a stable and well-functioning banking system is a key pillar of economic growth. Against this background, Bonfim analyzes some issues that may critically influence the stability of the financial system and, ultimately, of the economy.

Bonfim addresses several related research questions, built around two main pillars of banking risk: i) funding liquidity risk, which is intrinsically associated with banks’ key functions of liquidity creation and maturity transformation; and ii) credit risk, which often leads to sizeable losses in banks’ loan books.

Regarding liquidity risk, the main question addressed is whether banks engage in collective risk taking strategies that may lead to an increase in systemic risk and to costly banking crises.

Concerning credit risk, Bonfim provides new insights about how credit risk varies through the business cycle. Further, Bonfim focuses on what happens to firms after they default on their bank loans, most notably in what concerns their ability to regain access to credit markets.

Finally, Bonfim examines the effects of bank mergers, given that these events may affect the stability of the banking system, as well as firms’ and households’ access to credit.

The results of this research contribute to improve the knowledge on these key dimensions of bank risk and on issues related to access to credit, while also providing some guidance for policymakers.

Diana C. Ribeiro Guimarães Bonfim will be awarded her PhD on 6 February 2014 (16.15h). Thesis supervidor is prof.dr. K.F. Roszbach. Thesis title: Essays on banking risk and access to credit.