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

34 Pages Posted: 25 Oct 2019 Last revised: 31 May 2022

See all articles by Luca Bellardini

Luca Bellardini

Bocconi University - GREEN Research Centre

Pierluigi Murro

Luiss Guido Carli University - Department of Business and Management

Daniele Previtali

University of Naples Parthenope - Department of Management Studies and Quantitative Methods

Date Written: October 9, 2019

Abstract

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

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

Luca Bellardini

Bocconi University - GREEN Research Centre

Via Röntgen, 1
Milan, MI 20136
Italy

HOME PAGE: http://www.green.unibocconi.it

Pierluigi Murro

Luiss Guido Carli University - Department of Business and Management ( email )

Via Salvini, 3
Rome, 00198
Italy

Daniele Previtali (Contact Author)

University of Naples Parthenope - Department of Management Studies and Quantitative Methods ( email )

Via Generale Parisi, 13
Naples
Italy

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