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Inside Debt and Enterprise-Wide Bank Risk Sjoerd van Bekkum

This conference paper discusses the impact of inside debt on realized bank risk and highlights the importance of studying realized risk in addition to expected risk. The paper examines the role of executive age, managerial quality, and informational asymmetry in understanding the relationship between inside debt and bank risk.

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Inside Debt and Enterprise-Wide Bank Risk Sjoerd van Bekkum

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  1. Inside Debt and Enterprise-Wide Bank RiskSjoerd van Bekkum Discussion by Patrick Verwijmeren Conference “Corporate governance of financial institutions”

  2. Summary

  3. Conclusion • Inside debt reduces realized bank risk Overall assessment: • Highly relevant topic • Part of a stream of new literature • Paper has many nice features

  4. Comments • Is the focus on risk or performance? • Stress that this is an example in which risk turned out to be value destroying

  5. Comments • When focusing on performance: Think about the quality of the manager • Endogeneity: executive age • When focusing on risk: Did top managers even know they were taking huge risks? • How representative is this period?

  6. Is this a good paper? • Yes: relevant topic, careful analysis, nicely written • Explain a bit more why studying realized risk is a useful addition to studying expected risk • High informational asymmetry?

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