Shareholder activism in banking

Raluca Roman ()

No RWP 15-9, Research Working Paper from Federal Reserve Bank of Kansas City

Abstract: This paper conducts the first assessment of shareholder activism in banking and its effects on risk and performance. The focus is on the conflicts among bank shareholders, managers, and creditors (e.g., regulators, deposit insurer, taxpayers, depositors). This paper finds activism may generally be a destabilizing force, increasing bank risk-taking, but creating market value for shareholders, and leaving operating returns unchanged, consistent with the empirical dominance of the Shareholder-Creditor Conflict. However, during financial crises, the increase in risk disappears, suggesting activism risk incentives may be muted. From a public perspective, creditors (including the government) may lose during normal times, but not during financial crises.

Keywords: Banking; Financial crises; Financial stability; Shareholder activism (search for similar items in EconPapers)
JEL-codes: G01 G21 G28 G38 (search for similar items in EconPapers)
Pages: 77 pages
Date: 2015-08-01
New Economics Papers: this item is included in nep-cfn
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Citations: View citations in EconPapers (3)

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