Abstract
The 2008 financial crisis originated at banking institutions with a specific combination of high leverage, low liquidity, low capitalization and high exposure to subprime mortgage loans. We perform a comparative analysis of independent banks and holding company affiliated banks, and find that during the crisis holding company affiliation was related to a higher risk position in banks, characterized by riskier mortgage loans, higher leverage and lower liquidity and capitalization. Market measures of risk during this period, however, were not different for the different structures, indicating that the market did not price the additional risk contribution of affiliated banks to the main causes of the contagion.
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