Labor unions and bank risk culture: evidence from the financial crisis

Dien Giau Bui, Yan-Shing Chen, Hsing-Hua Hsu and Chih-Yung Lin

Journal of Financial Stability, 2020, vol. 51, issue C

Abstract: In this paper, we examine the effect of labor unions on bank performance during the recent financial crisis. Empirical evidence from the 314 largest global banks indicates that the stock returns and profitability of unionized banks are higher, and the default probabilities are lower than non-unionized banks. Moreover, unionized banks have lower tail risk in their stock returns, more tangible equity, more liquid assets, and better quality lending before the crisis than non-unionized banks. These finding show that unionized banks operate more conservatively and engage in less risk-taking. Our results imply that union preferences can shape the risk culture of banks.

Keywords: Financial crisis; Labor unions; Stock returns; Default probability; Risk-taking (search for similar items in EconPapers)
JEL-codes: G01 G21 G33 G34 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finsta:v:51:y:2020:i:c:s1572308920300814

DOI: 10.1016/j.jfs.2020.100782

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