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Corporate governance and procyclicality in a banking crisis: Empirical evidence and implications

Francisco Ibañez, Peña-Cerezo, Miguel A. and Araujo- de-la-Mata, Andrés

Finance Research Letters, 2019, vol. 30, issue C, 271-275

Abstract: This paper presents our analysis of a complete financial data set on the population of Spanish deposit institutions for the last credit cycle. This information is combined with details about the characteristics of the corporate governance of the banks. Our results show that in a context of rapid credit growth (2002–2007), only financial institutions managed with political criteria have eventually experienced serious solvency problems (2008–2017) and have finally had to be bailed out with public resources. These results are particularly relevant for the establishment of appropriate prudential policies in countries where a government-owned banking system still exists.

Keywords: Financial crisis; Bank bailout; Procyclicality; Corporate governance; Politically motivated lending; Connected lending (search for similar items in EconPapers)
JEL-codes: G21 G28 G32 (search for similar items in EconPapers)
Date: 2019
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