No Smoking Gun: Private Shareholders, Governance Rules and Central Bank Financial Behavior

44 Pages Posted: 14 Nov 2016

See all articles by Jon Bartels

Jon Bartels

Gutenberg School of Economics and Management

Barry Eichengreen

University of California, Berkeley; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Beatrice Weder di Mauro

Graduate Institute Geneva, IHEID

Date Written: November 2016

Abstract

Do central banks with private shareholders differ in their financial behavior from purely public central banks? Private shareholders might bias central banks toward focusing excessively on profits, dividends and risks to their balance sheets, but their influence may also be mitigated by governance rules. We study 35 OECD central banks, including eight with private shareholders, using new data on governance rules. We find that central banks with private shareholders do not differ from their purely public counterparts in their profitability, nor are they more financially cautious in the sense of building more loss-absorbing capacity. Surprisingly, their transfers to governments out of current profits tend to be higher, not lower. We find that broader governance rules matter for financial payouts.

Keywords: central bank governance, private sharehoders

JEL Classification: E58, F30, G38

Suggested Citation

Bartels, Jon and Eichengreen, Barry and Weder di Mauro, Beatrice, No Smoking Gun: Private Shareholders, Governance Rules and Central Bank Financial Behavior (November 2016). CEPR Discussion Paper No. DP11625, Available at SSRN: https://ssrn.com/abstract=2869079

Jon Bartels (Contact Author)

Gutenberg School of Economics and Management ( email )

Mainz
Germany

Barry Eichengreen

University of California, Berkeley ( email )

310 Barrows Hall
Berkeley, CA 94720
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Beatrice Weder di Mauro

Graduate Institute Geneva, IHEID ( email )

Geneva Avenue de la Paix 11A
Geneva, 1202
Switzerland
1211 (Fax)

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