The impact of government ownership on bank risk

Giuliano Iannotta, Giacomo Nocera () and Andrea Sironi ()
Additional contact information
Giacomo Nocera: Audencia Recherche - Audencia Business School

Post-Print from HAL

Abstract: We use cross-country data on a sample of large European banks to evaluate the impact of government ownership on bank risk. We distinguish between default risk (likelihood of creditors' losses) and operating risk (likelihood of negative equity). Our analysis is based on the joint use of issuer ratings, a synthetic measure of a bank's probability of default, and individual ratings, which omit the influence of any external support and focus on a bank's operating risk. We report two main results. First, government-owned banks (GOBs) have lower default risk but higher operating risk than private banks, indicating the presence of governmental protection that induces higher risk taking. Second, GOBs' operating risk and governmental protection tend to increase in election years. These results are consistent with the idea that GOBs pursue political goals and have important policy implications for recently nationalized European banks.

Keywords: European banking; Government ownership; Bank risk (search for similar items in EconPapers)
Date: 2013
References: Add references at CitEc
Citations: View citations in EconPapers (134)

Published in Journal of Financial Intermediation, 2013, 22 (2), pp.152-176. ⟨10.1016/j.jfi.2012.11.002⟩

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: The impact of government ownership on bank risk (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00840432

DOI: 10.1016/j.jfi.2012.11.002

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().