Peydró, José-LuisPolo, AndreaSette, EnricoVanasco, VictoriaUniversitat Pompeu Fabra. Departament d'Economia i Empresa2024-11-142024-11-142020-11-01http://hdl.handle.net/10230/68559We show that risk-mitigating incentives dominate risk-shifting incentives in fragile banks. We study security trading by banks, as banks can easily and quickly change their risk exposure within their security portfolio. For identification, we exploit different crisis shocks and supervisory ISIN-bank-month-level data. Less capitalized banks take relatively less risk after financial stress shocks. Results hold within identical regulatory capital risk weights categories. Moreover, additional tests suggest that banks' own incentives, rather than supervision, are the main drivers. Results hold for the different crisis shocks since 2007/08, including the COVID-19 one. A model of bank behavior rationalizes our findings.application/pdfengL'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative CommonsRisk mitigating versus risk shifting: evidence from banks security trading in crises<resourceType xmlns="http://datacite.org/schema/kernel-3" resourceTypeGeneral="Other">info:eu-repo/semantics/workingPaper</resourceType><subject xmlns="http://datacite.org/schema/kernel-3" subjectScheme="keyword">risk shifting</subject><subject xmlns="http://datacite.org/schema/kernel-3" subjectScheme="keyword">financial crises</subject><subject xmlns="http://datacite.org/schema/kernel-3" subjectScheme="keyword">securities</subject><subject xmlns="http://datacite.org/schema/kernel-3" subjectScheme="keyword">bank capital</subject><subject xmlns="http://datacite.org/schema/kernel-3" subjectScheme="keyword">interbank funding</subject><subject xmlns="http://datacite.org/schema/kernel-3" subjectScheme="keyword">concentration risk</subject><subject xmlns="http://datacite.org/schema/kernel-3" subjectScheme="keyword">uncertainty</subject><subject xmlns="http://datacite.org/schema/kernel-3" subjectScheme="keyword">risk weights</subject><subject xmlns="http://datacite.org/schema/kernel-3" subjectScheme="keyword">available for sale</subject><subject xmlns="http://datacite.org/schema/kernel-3" subjectScheme="keyword">held to maturity</subject><subject xmlns="http://datacite.org/schema/kernel-3" subjectScheme="keyword">trading book</subject><subject xmlns="http://datacite.org/schema/kernel-3" subjectScheme="keyword">covid-19</subject><subject xmlns="http://datacite.org/schema/kernel-3" subjectScheme="keyword">Finance and Accounting</subject><rights xmlns="http://datacite.org/schema/kernel-3">info:eu-repo/semantics/openAccess</rights>