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Why Do Spanish Savings Banks Invest In The Stock Capital Of Publicly Traded Companies?

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  • GONZÁLEZ, Mariano
  • FERNÁNDEZ, Pedro

Abstract

By definition, Savings Banks form part of what is known as the social economy, so their investment policies must logically comply with objective efficiency and other more subjective social criteria. However, at different moments in time, accusations have been launched against their investment policies, claiming that they have ignored both the above criteria. The aim of this paper is therefore to empirically determine, based on a samples of publicly traded Spanish companies, whether said claims are founded or not. We use a qualitative dependent variable model (logit) to analyse the variables explaining the investment performance of savings banks compared with regular banks, and between savings banks according to whether the company is publicly traded or not. The results indicate that investment in the publicly trading companies in our sample does not comply with efficiency criteria based on business returns, but is mere speculation aimed at market gains.

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Bibliographic Info

Article provided by Euro-American Association of Economic Development in its journal Applied Econometrics and International Development.

Volume (Year): 6 (2006)
Issue (Month): 1 ()
Pages:

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Handle: RePEc:eaa:aeinde:v:6:y:2006:i:1_8

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Related research

Keywords: saving banks; efficiency; investment policy; market;

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  1. Gary Gorton & Frank A. Schmid, 1996. "Universal Banking and the Performance of German Firms," NBER Working Papers 5453, National Bureau of Economic Research, Inc.
  2. Fohlin, Caroline, 1996. "Relationship Banking, Liquidity, and Investment in the German Industrialization," Working Papers 913, California Institute of Technology, Division of the Humanities and Social Sciences.
  3. Kenneth Train, 2003. "Discrete Choice Methods with Simulation," Online economics textbooks, SUNY-Oswego, Department of Economics, number emetr2, Spring.
  4. Servaes, Henri & Zenner, Marc, 1996. "The Role of Investment Banks in Acquisitions," Review of Financial Studies, Society for Financial Studies, vol. 9(3), pages 787-815.
  5. Kumbhakar, Subal C, et al, 2001. "The Effects of Deregulation on the Performance of Financial Institutions: The Case of Spanish Savings Banks," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 33(1), pages 101-20, February.
  6. Ergungor, O. Emre, 2004. "Market- vs. bank-based financial systems: Do rights and regulations really matter?," Journal of Banking & Finance, Elsevier, vol. 28(12), pages 2869-2887, December.
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