{"id":8638,"date":"2012-05-01T15:14:00","date_gmt":"2012-05-01T13:14:00","guid":{"rendered":"https:\/\/casmef.luiss.it\/publications\/were-multinational-banks-taking-excessive-risks-before-the-recent-financial-crisis\/"},"modified":"2026-07-30T15:15:03","modified_gmt":"2026-07-30T13:15:03","slug":"were-multinational-banks-taking-excessive-risks-before-the-recent-financial-crisis","status":"publish","type":"casmef_publication","link":"https:\/\/casmef.luiss.it\/en\/publications\/were-multinational-banks-taking-excessive-risks-before-the-recent-financial-crisis\/","title":{"rendered":"Were Multinational Banks Taking Excessive Risks Before the Recent Financial Crisis?\u00a0"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">Abstract: The recent financial crisis has clearly shown that the relationship between bank internationalization and risk is complex. Multinational banks can benefit from portfolio diversification, reducing their overall riskiness, but this effect can be offset by incentives going in the opposite direction, leading them to take on excessive risks. Since both effects are grounded on solid theoretical arguments, the answer of what is the actual relationship between bank internationalization and risk is left to the empirical analysis. In this paper, we study such relationship in the period leading to the financial crisis of 2007-2008. For a sample of 384 listed banks from 56 countries, we calculate two measures of risk for the period from 2001 to 2007 \u00b1 the expected default frequency (EDF), a market-based and forward-looking indicator, and the Z-score, a balance-sheet-based and backward-looking measure \u00b1 and relate them to their degree of internationalization. We find robust evidence that international diversification increases bank risk.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Gulamhussen MA, Pinheiro C, Pozzolo AF. CASMEF Working Paper Series. 2012;(9). <\/p>\n","protected":false},"template":"","publication_type":[559],"class_list":["post-8638","casmef_publication","type-casmef_publication","status-publish","hentry"],"acf":{"pub_unit":7855,"pub_file":8637},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.6 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Were Multinational Banks Taking Excessive Risks Before the Recent Financial Crisis?\u00a0 - Casmef<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/casmef.luiss.it\/en\/publications\/were-multinational-banks-taking-excessive-risks-before-the-recent-financial-crisis\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Were Multinational Banks Taking Excessive Risks Before the Recent Financial Crisis?\u00a0 - Casmef\" \/>\n<meta property=\"og:description\" content=\"Gulamhussen MA, Pinheiro C, Pozzolo AF. CASMEF Working Paper Series. 2012;(9).\" \/>\n<meta property=\"og:url\" content=\"https:\/\/casmef.luiss.it\/en\/publications\/were-multinational-banks-taking-excessive-risks-before-the-recent-financial-crisis\/\" \/>\n<meta property=\"og:site_name\" content=\"Casmef\" \/>\n<meta property=\"article:modified_time\" content=\"2026-07-30T13:15:03+00:00\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"1 minute\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/casmef.luiss.it\\\/en\\\/publications\\\/were-multinational-banks-taking-excessive-risks-before-the-recent-financial-crisis\\\/\",\"url\":\"https:\\\/\\\/casmef.luiss.it\\\/en\\\/publications\\\/were-multinational-banks-taking-excessive-risks-before-the-recent-financial-crisis\\\/\",\"name\":\"Were Multinational Banks Taking Excessive Risks Before the Recent Financial Crisis?\u00a0 - Casmef\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/casmef.luiss.it\\\/en\\\/#website\"},\"datePublished\":\"2012-05-01T13:14:00+00:00\",\"dateModified\":\"2026-07-30T13:15:03+00:00\",\"breadcrumb\":{\"@id\":\"https:\\\/\\\/casmef.luiss.it\\\/en\\\/publications\\\/were-multinational-banks-taking-excessive-risks-before-the-recent-financial-crisis\\\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/casmef.luiss.it\\\/en\\\/publications\\\/were-multinational-banks-taking-excessive-risks-before-the-recent-financial-crisis\\\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/casmef.luiss.it\\\/en\\\/publications\\\/were-multinational-banks-taking-excessive-risks-before-the-recent-financial-crisis\\\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/casmef.luiss.it\\\/en\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Were Multinational Banks Taking Excessive Risks Before the Recent Financial Crisis?\u00a0\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/casmef.luiss.it\\\/en\\\/#website\",\"url\":\"https:\\\/\\\/casmef.luiss.it\\\/en\\\/\",\"name\":\"Casmef\",\"description\":\"\",\"publisher\":{\"@id\":\"https:\\\/\\\/casmef.luiss.it\\\/en\\\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/casmef.luiss.it\\\/en\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\\\/\\\/casmef.luiss.it\\\/en\\\/#organization\",\"name\":\"Casmef\",\"url\":\"https:\\\/\\\/casmef.luiss.it\\\/en\\\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/casmef.luiss.it\\\/en\\\/#\\\/schema\\\/logo\\\/image\\\/\",\"url\":\"https:\\\/\\\/casmef.luiss.it\\\/wp-content\\\/uploads\\\/2026\\\/07\\\/Logo-CASMEF.svg\",\"contentUrl\":\"https:\\\/\\\/casmef.luiss.it\\\/wp-content\\\/uploads\\\/2026\\\/07\\\/Logo-CASMEF.svg\",\"caption\":\"Casmef\"},\"image\":{\"@id\":\"https:\\\/\\\/casmef.luiss.it\\\/en\\\/#\\\/schema\\\/logo\\\/image\\\/\"}}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Were Multinational Banks Taking Excessive Risks Before the Recent Financial Crisis?\u00a0 - Casmef","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/casmef.luiss.it\/en\/publications\/were-multinational-banks-taking-excessive-risks-before-the-recent-financial-crisis\/","og_locale":"en_US","og_type":"article","og_title":"Were Multinational Banks Taking Excessive Risks Before the Recent Financial Crisis?\u00a0 - Casmef","og_description":"Gulamhussen MA, Pinheiro C, Pozzolo AF. 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