The Risk Weighted Ownership Index: An Ex-Ante Measure of Banks’ Risk and Performance

Attributing ratings to the top-20 owners, we construct a Risk-Weighted Ownership index (RWO) to measure the profitability and risk-taking behaviour of the ownership structure at banks. Collecting data from 19 European countries plus the UK over the 2008-2017 period, preliminary results show strong evidence that RWO measures are significant in explaining bank performance and risk, at both an accounting and a market-based level. Overall, these results suggest that not only markets and regulators should look at bank’s owners: instead, it is far more relevant to assess the contribution carried by top-owners to bank risk, both individually and collectively.

Keywords: bank, ownership, risk, corporate governance

JEL Classification: G21, G32

Suggested Citation: Suggested Citation

Bellardini, Luca and Murro, Pierluigi and Previtali, Daniele, The Risk Weighted Ownership Index: An Ex-Ante Measure of Banks’ Risk and Performance (October 9, 2019). Available at SSRN: https://ssrn.com/abstract=3466966 or http://dx.doi.org/10.2139/ssrn.3466966