Banks financially supporting each other indicative of ‘risk taking’ #Banks #financially #supporting #indicative #risk #englishheadline

University of Sydney’s Head of Business and Finance Professor Eliza Wu says banks propping up other banks will change “behaviour” to engage in higher risk-taking and increases the risk of collapse.

“If the support is expected by other banks, that will change their behaviour to engage in more risk-taking – increase the systemic risk in the entire system going forwards,” Professor Wu told Englishheadline Business Editor Ross Greenwood.

“In the short term the benefits of doing that – it signals to the market the banks are sound – fundamentally strong.”