Ownership Structure and Risk in Publicly Held and Privately Owned Banks
47 Pages Posted: 24 Aug 2009 Last revised: 14 Feb 2010
There are 2 versions of this paper
Ownership Structure and Risk in Publicly Held and Privately Owned Banks
Ownership Structure and Risk in Publicly Held and Privately Owned Banks
Date Written: November 2009
Abstract
Using detailed ownership data for a sample of European commercial banks, we analyze the link between ownership structure and risk in both privately owned and publicly held banks. We consider five categories of shareholders (managers/directors, institutional investors, non-financial companies, individuals/families, and banks), a breakdown specific to our dataset. Controlling for various factors, we find that ownership structure is significant in explaining risk differences but that such findings mainly hold for privately owned banks. On the whole, a higher equity stake of either individuals/families or banking institutions is associated with a decrease in asset risk and default risk. Also, institutional investors and non-financial companies seem to impose the riskiest strategies when they hold higher stakes. We further find no significant differences in asset risk and default risk between publicly-held and privately-owned banks. Moreover, for public banks, changes in ownership structure do not affect risk taking. Market forces seem to align the risk-taking behavior of public banks and the ownership structure is no more a determinant to explain risk differences. An exception is that higher stakes of banking institutions in public banks are associated with lower credit and default risk.
Keywords: Ownership structure, bank risk, European banks, Market Discipline
JEL Classification: G21, G32
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Bank Governance, Regulation, and Risk Taking
By Luc Laeven and Ross Levine
-
Bank Governance, Regulation, and Risk Taking
By Luc Laeven and Ross Levine
-
Bank CEO Incentives and the Credit Crisis
By Rüdiger Fahlenbrach and René M. Stulz
-
Bank CEO Incentives and the Credit Crisis
By Rüdiger Fahlenbrach and René M. Stulz
-
By Andrea Beltratti and René M. Stulz
-
By Andrea Beltratti and René M. Stulz
-
The Credit Crisis Around the Globe: Why Did Some Banks Perform Better?
By Andrea Beltratti and René M. Stulz
-
Corporate Governance Lessons from the Financial Crisis
By Hector J. Lehuede, Grant Kirkpatrick, ...
-
The Wages of Failure: Executive Compensation at Bear Stearns and Lehman 2000-2008
By Lucian A. Bebchuk, Alma Cohen, ...
-
The 2007 Meltdown in Structured Securitization: Searching for Lessons not Scapegoats
By Gerard Caprio, Asli Demirgüç-kunt, ...