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Ownership structure, market discipline, and banks' risk-taking incentives under deposit insurance

Forssbaeck, Jens LU (2011) In Journal of Banking & Finance 35(10). p.2666-2678
Abstract
The paper studies the effects of market discipline by creditors and ownership structure on banks' risk taking in the presence of partial deposit insurance. An agency-cost model explains how the effects of creditor discipline and shareholder control arc interdependent, the non-monotonic effect of shareholder control, and the role of leverage. Panel regressions on several hundred banks worldwide 1995-2005 confirm a negative individual risk effect of creditor discipline and the expected convex effect of shareholder control. Increased shareholder control significantly strengthens the negative effect of market discipline on asset risk, but joint effects on overall default risk are limited. (C) 2011 Elsevier B.V. All rights reserved.
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author
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
Bank risk, Market discipline, Ownership structure, Deposit insurance
in
Journal of Banking & Finance
volume
35
issue
10
pages
2666 - 2678
publisher
Elsevier
external identifiers
  • wos:000294037800013
  • scopus:79960910979
ISSN
1872-6372
DOI
10.1016/j.jbankfin.2011.02.024
language
English
LU publication?
yes
id
ecd12fdb-928b-4ea3-a83f-97425c8593bf (old id 2161979)
date added to LUP
2011-09-21 10:02:07
date last changed
2017-11-19 03:20:42
@article{ecd12fdb-928b-4ea3-a83f-97425c8593bf,
  abstract     = {The paper studies the effects of market discipline by creditors and ownership structure on banks' risk taking in the presence of partial deposit insurance. An agency-cost model explains how the effects of creditor discipline and shareholder control arc interdependent, the non-monotonic effect of shareholder control, and the role of leverage. Panel regressions on several hundred banks worldwide 1995-2005 confirm a negative individual risk effect of creditor discipline and the expected convex effect of shareholder control. Increased shareholder control significantly strengthens the negative effect of market discipline on asset risk, but joint effects on overall default risk are limited. (C) 2011 Elsevier B.V. All rights reserved.},
  author       = {Forssbaeck, Jens},
  issn         = {1872-6372},
  keyword      = {Bank risk,Market discipline,Ownership structure,Deposit insurance},
  language     = {eng},
  number       = {10},
  pages        = {2666--2678},
  publisher    = {Elsevier},
  series       = {Journal of Banking & Finance},
  title        = {Ownership structure, market discipline, and banks' risk-taking incentives under deposit insurance},
  url          = {http://dx.doi.org/10.1016/j.jbankfin.2011.02.024},
  volume       = {35},
  year         = {2011},
}