The browser you are using is not supported by this website. All versions of Internet Explorer are no longer supported, either by us or Microsoft (read more here: https://www.microsoft.com/en-us/microsoft-365/windows/end-of-ie-support).

Please use a modern browser to fully experience our website, such as the newest versions of Edge, Chrome, Firefox or Safari etc.

Default user image.

Jens Forssbaeck

Associate professor, Programme director – Master of Finance

Default user image.

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

Author

  • Jens Forssbaeck

Summary, in English

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.

Department/s

  • Institute of Economic Research

Publishing year

2011

Language

English

Pages

2666-2678

Publication/Series

Journal of Banking & Finance

Volume

35

Issue

10

Document type

Journal article

Publisher

Elsevier

Topic

  • Economics and Business

Keywords

  • Bank risk
  • Market discipline
  • Ownership structure
  • Deposit insurance

Status

Published

ISBN/ISSN/Other

  • ISSN: 1872-6372