How Can We Track Bank Risk?

The video discusses the differences between bank equity and book value, highlighting their roles in economic models and their divergence during crises. It introduces Yana Bigger's research on bank risk measurement, emphasizing the replicating portfolio approach. The video explores leverage, interest rate exposure, and the unique role of banks in the payment system. It also addresses methodological issues in aggregate studies and the challenges of predicting bank risks.

How does leverage affect the risk profile of banks?

What role does net interest margin play in assessing bank performance?

In what ways do stock market perceptions of banks differ from their actual risk exposures?