Bank Culture Risk-Taking: Evidence from the European Banking Sector

40 Pages Posted: 30 Jan 2018 Last revised: 3 Apr 2019

See all articles by Laura Mervelskemper

Laura Mervelskemper

Ruhr University of Bochum - Department of Finance and Banking

Rouven Möller

Ruhr University of Bochum - Department of Finance and Banking

Simon Schumacher

Ruhr University of Bochum

Date Written: August 1, 2018

Abstract

This paper is the first to empirically study the effects of different types of corporate culture on the risk-taking behavior of European banks. Based on a text analysis approach following the competing values framework, we analyze a hand-collected sample of 167 European banks from 2005 to 2015. We find that collaborate- and control-cultures have a risk-mitigating effect in terms of credit and default risk. Additionally, we find that collaborate- and control-banks have an even lower risk-taking in the recent financial crises, while compete-banks face erratically higher risks. Finally, we find that collaborate- and control-cultures affect the efficacy of govern-ance mechanisms.

Keywords: Bank Risk-Taking; Bank Culture; Competing Values Framework

JEL Classification: G21, G32, G34, G38, M14

Suggested Citation

Mervelskemper, Laura and Möller, Rouven and Schumacher, Simon, Bank Culture Risk-Taking: Evidence from the European Banking Sector (August 1, 2018). Available at SSRN: https://ssrn.com/abstract=3101660 or http://dx.doi.org/10.2139/ssrn.3101660

Laura Mervelskemper (Contact Author)

Ruhr University of Bochum - Department of Finance and Banking ( email )

Universitätsstraße 150
Bochum, 44801
Germany

Rouven Möller

Ruhr University of Bochum - Department of Finance and Banking ( email )

Universitätsstraße 150
Bochum, 44780
Germany
+49(0)234 32-27683 (Phone)

Simon Schumacher

Ruhr University of Bochum ( email )

Bochum, 44780
Germany

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