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I suppose if you took the loan portfolio of a bank or caja and broke it up into groups more or less randomly you'd minimize systemic risk... except for the very small institutions whose portfolios would probably be very concentrated geographically. There are 45 Cajas in Spain, most of them of provincial scope (Spain is broken down in 50 provinces and has 45M people in half a million square kilometres). One of the Cajas has only 20 branches. But I guess the size of the portfolio is correlatd with its diversity.

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
by Migeru (migeru at eurotrib dot com) on Wed Oct 8th, 2008 at 05:06:53 PM EST
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