Download or read book Regulatory and Institutional Determinants of Credit Risk Taking and Bank's Default in Emerging Market Economies written by Christophe J. Godlewski and published by . This book was released on 2007 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: Regulatory and institutional environment is not without effect on bank's risk taking and therefore on bank's default. In this article, we investigate regulatory and institutional determinants of credit risk taking and bank's default probability in emerging market economies. Using a two step logit model applied to a database of banks from emerging economies, we confirm the role of the institutional and regulatory environment as a source of excess credit risk, which increases bank's default risk. In particular, the rule of law appears to be a crucial element of an efficient regulatory environment, which may reduce excessive risk taking incentives.