Local Bank Risk and the Regional Economic Environment: A Study of Cooperative Banks and Savings Banks in Germany
This essay investigates the impact of a bank’s local economic environment that on its overall bank risk. Balance sheet data of Germany’s regionally-active savings banks (Sparkassen) and credit cooperatives (Kreditgenossenschaften) is matched with data from regional statistics to construct a dataset spanning the time period from 2000 until 2013. Bank risk is measured by time-varying Z-scores, an in