Bank Ownership Market Structure And Risk
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| Author | : Gianni De Nicoló |
| Publisher | : International Monetary Fund |
| Total Pages | : 50 |
| Release | : 2007-09 |
| Genre | : Business & Economics |
| ISBN | : |
This paper presents a model of a banking industry with heterogeneous banks that delivers predictions on the relationship between banks' risk of failure, market structure, bank ownership, and banks' screening and bankruptcy costs. These predictions are explored empirically using a panel of individual banks data and ownership information including more than 10,000 bank-year observations for 133 non-industrialized countries during the 1993-2004 period. Four main results obtain. First, the positive and significant relationship between bank concentration and bank risk of failure found in Boyd, De Nicolò and Al Jalal (2006) is stronger when bank ownership is taken into account, and it is strongest when state-owned banks have sizeable market shares. Second, conditional on country and firm specific characteristics, the risk profiles of foreign (state-owned) banks are significantly higher than (not significantly different from) those of private domestic banks. Third, private domestic banks do take on more risk as a result of larger market shares of both state-owned and foreign banks. Fourth, the model rationalizes this evidence if both state-owned and foreign banks have either larger screening and/or lower bankruptcy costs than private domestic banks, banks' differences in market shares, screening or bankruptcy costs are not too large, and loan markets are sufficiently segmented across banks of different ownership.
| Author | : Thierno Barry |
| Publisher | : |
| Total Pages | : 27 |
| Release | : 2012 |
| Genre | : |
| ISBN | : |
The objective of this paper is to analyze the influence of ownership structure on the risk taking behavior of European commercial banks. We consider five categories of shareholders (managers/directors, institutional investors, non financial companies, individuals and families, and banks). Controlling for various factors, we find that asset risk is lower for banks where a higher proportion of total stocks is held by families and individuals who have less diversified portfolios. We also find that the probability of default of banks is higher when non financial companies or institutional investors hold a higher proportion of total equity. However, these results do not hold for listed banks in which non financial companies hold higher stakes suggesting that the market might be limiting the risk-taking incentives of such shareholders. We further show that market forces might be more effective in influencing risk in banks with a higher involvement of non financial companies than in banks with a higher portion of stock held by institutional investors.
| Author | : Oz Shy |
| Publisher | : |
| Total Pages | : 26 |
| Release | : 1999 |
| Genre | : Banks and banking |
| ISBN | : 9789515556097 |
| Author | : Arnold Andersen Heggestad |
| Publisher | : |
| Total Pages | : 194 |
| Release | : 1973 |
| Genre | : Bank management |
| ISBN | : |
| Author | : David G. McMillan |
| Publisher | : |
| Total Pages | : 48 |
| Release | : 2015 |
| Genre | : |
| ISBN | : |
This paper documents the recent changing structure of the US bank market, as it has become more deregulated and specifically asks how this affects bank behaviour as it relates to profits and risk. Using a variety of approaches, such as the HHI and Lerner measures, we document a general increase in concentration and market power, at least until the recent crisis period. Importantly, we then consider whether these changes, or whether bank specific and general economic conditions have a greater impact on bank profit and risk. Results support the view that changes to market structure (especially market power) while positively impacting profit and persistence do not lead to increased risk. However, market share (or bank size) does, albeit not for the largest banks. Results also support the view that banks may increase some elements of risk as well as profit during an economic expansion. Notwithstanding, this an overriding feature of the results is differences in the conditioning factors across size strata and time. This leads to the conclusion that there is no simple relationship between market structure and competition and risk and that benign economic condition play a key role in reducing competition and possibly increasing risk. The key implication of the results is the need for more nuanced policy-making with regard to bank size, performance and economic conditions.
| Author | : Robert Cull |
| Publisher | : International Monetary Fund |
| Total Pages | : 49 |
| Release | : 2017-03-22 |
| Genre | : Business & Economics |
| ISBN | : 1475588127 |
This paper presents recent trends in bank ownership across countries and summarizes the evidence regarding the implications of bank ownership structure for bank performance and competition, financial stability, and access to finance. The evidence reviewed suggests that foreign-owned banks are more efficient than domestic banks in developing countries, promote competition in host banking sectors, and help stabilize credit when host countries face idiosyncratic shocks. But there are tradeoffs, since foreign-owned banks can transmit external shocks and might not always expand access to credit. The record on the impact of government bank ownership suggests few benefits, especially for developing countries.
| Author | : Helena Mary Mullins |
| Publisher | : |
| Total Pages | : 202 |
| Release | : 1990 |
| Genre | : |
| ISBN | : |
| Author | : H. Prescott Beighley |
| Publisher | : |
| Total Pages | : 23 |
| Release | : |
| Genre | : |
| ISBN | : |
| Author | : Robert Cull |
| Publisher | : International Monetary Fund |
| Total Pages | : 49 |
| Release | : 2017-03-22 |
| Genre | : Business & Economics |
| ISBN | : 1475588127 |
This paper presents recent trends in bank ownership across countries and summarizes the evidence regarding the implications of bank ownership structure for bank performance and competition, financial stability, and access to finance. The evidence reviewed suggests that foreign-owned banks are more efficient than domestic banks in developing countries, promote competition in host banking sectors, and help stabilize credit when host countries face idiosyncratic shocks. But there are tradeoffs, since foreign-owned banks can transmit external shocks and might not always expand access to credit. The record on the impact of government bank ownership suggests few benefits, especially for developing countries.
| Author | : Dung Tran |
| Publisher | : |
| Total Pages | : 41 |
| Release | : 2019 |
| Genre | : |
| ISBN | : |
Using a large panel of US BHC over the 2001:Q1-2015:Q4, we investigate the risk-taking behaviors of banks within a comparison perspective - between public and private banks - where there exists substantial differences of asymmetry information and agency problems. We document evidence of greater stability of public banks versus their private peers. However, public banks become riskier than private banks during the last crisis. These findings suggest a mixed evidence of risk-taking mitigating role of listing status. Regulatory pressure is effective in limiting risk taking by undercapitalized public banks before, but not during the crisis, casting doubt the effectiveness of regulators during the turmoil times. Public banks with high franchise value expose to risk less than others during the crisis. Debtholders discipline is ineffective in curbing the risk-taking behavior of banks. Our study is of interest for regulators, policymakers who are in search of improving bank risk-taking behavior.
