A Bright Side of Labor Union in Global Banks: Evidence from the Financial Crisis

35 Pages Posted: 9 Feb 2017

See all articles by Dien Giau Bui

Dien Giau Bui

National Taiwan University, Department of Finance, Students

Yan-Shing Chen

National Taiwan University

Hsing-Hua Hsu

National Taiwan University - Department of Finance

Chih-Yung Lin

National Chiao-Tung University

Date Written: December 30, 2016

Abstract

This paper examines whether labor unions affect the bank performance during recently financial crisis. The empirical evidence from 228 largest banks around the globe indicate that the buy-and-hold returns of unionized banks are higher and the default probabilities are lower during the crisis period when compared non-unionized banks. In addition, unionized banks experience a larger increase in tier 1 capital ratio in crisis years and have lower leverage ratio and tail risk in the pre-crisis year. These results suggest that banks adopt less risky investment and lending policies to accommodate the preference of unionized labor.

Keywords: Financial Crisis, Labor Union, Corporate Governance, Bank Performance, Default Probability

JEL Classification: G01, G21, G33, G34

Suggested Citation

Bui, Dien Giau and Chen, Yan-Shing and Hsu, Hsing-Hua and Lin, Chih-Yung, A Bright Side of Labor Union in Global Banks: Evidence from the Financial Crisis (December 30, 2016). Available at SSRN: https://ssrn.com/abstract=2913917 or http://dx.doi.org/10.2139/ssrn.2913917

Dien Giau Bui

National Taiwan University, Department of Finance, Students ( email )

1, Sec. 4, Roosevelt Road
Taipei
Taiwan

Yan-Shing Chen (Contact Author)

National Taiwan University ( email )

1 Sec. 4, Roosevelt Road
Taipei 106, 106
Taiwan

Hsing-Hua Hsu

National Taiwan University - Department of Finance ( email )

1, Sec. 4, Roosevelt Road
Taipei, 106
Taiwan

Chih-Yung Lin

National Chiao-Tung University ( email )

Taiwan

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