Universität Mannheim / VWL / Priority Programme 1578 / Navigation / Projects / Interaction Between Bank-Specific Risk and Macroeconomic Stability

Interaction Between Bank-Specific Risk and Macroeconomic Stability

Coordinator: Dr. Franziska Bremus, Prof. Dr. Felix Noth

Participants: Thomas Krause, M.Sc.

The global financial crisis has demonstrated that financial markets and the real economy are closely related. We have learned that risk at the level of individual financial institutions can harm the stability of the financial system as a whole. This, in turn, affects macroeconomic performance and potentially slows down economic recovery.
In this project, we will investigate how risk at the level of large banks and macroeconomic performance are related. To that goal, we will build on the theory of granularity. This theory posits that volatility at the level of individual firms can translate into macroeconomic fluctuations if market concentration is high. Moreover, we will explore how regulatory policy affects the link between bank-level and systemic risk.

Working Papers:


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