Asset Management within Commercial Banking Groups: International Evidence

77 Pages Posted: 20 Nov 2017

See all articles by Miguel A. Ferreira

Miguel A. Ferreira

Nova School of Business and Economics; European Corporate Governance Institute (ECGI); Centre for Economic Policy Research (CEPR)

Pedro Matos

University of Virginia - Darden School of Business; European Corporate Governance Institute (ECGI)

Pedro Pires

Nova School of Business and Economics

Multiple version iconThere are 2 versions of this paper

Date Written: November 16, 2017

Abstract

We study the performance of equity mutual funds run by asset management divisions of commercial banking groups using a worldwide sample. We show that bank-affiliated funds under-perform unaffiliated funds by 92 basis points per year. Consistent with conflicts of interest, the under-performance is more pronounced among those affiliated funds that overweight more the stock of the bank’s lending clients. Divestitures of asset management divisions by banking groups support a causal interpretation of the results. Our findings suggest that affiliated fund managers support their lending divisions’ operations to reduce career concerns at the expense of fund investors.

Keywords: Mutual funds, Fund performance, Conflicts of interest, Universal banking

JEL Classification: G11, G23, G32

Suggested Citation

Ferreira, Miguel Almeida and Matos, Pedro and Pires, Pedro M., Asset Management within Commercial Banking Groups: International Evidence (November 16, 2017). Journal of Finance, Forthcoming, Darden Business School Working Paper No. 3072196, Available at SSRN: https://ssrn.com/abstract=3072196

Miguel Almeida Ferreira (Contact Author)

Nova School of Business and Economics ( email )

Campus de Carcavelos
Rua da Holanda, 1
Carcavelos, 2775-405
Portugal

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Pedro Matos

University of Virginia - Darden School of Business ( email )

University of Virginia
P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434 243 8998 (Phone)
434 924 0726 (Fax)

HOME PAGE: http://www.darden.virginia.edu/faculty-research/directory/pedro-matos/

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Pedro M. Pires

Nova School of Business and Economics ( email )

Campus de Carcavelos
Rua da Holanda, 1
Carcavelos, 2775-405
Portugal

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