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Does the shareholding network affect bank's risk-taking behavior? An exploratory study on Chinese commercial banks

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  • Li, Bing
  • Li, Changhong
  • Wang, Li

Abstract

The shareholding network provides a new paradigm to describe the relations between banks and their large shareholders. This shareholding network can affect bank performance where social capital embedded in it can be explained as the functioning mechanism and can be quantitatively measured by centrality metrics in network analysis. Specifically, this paper attempts to examine if the shareholding network has impact on banks’ risk-taking behavior in the context of the Chinese commercial banks. Our results show that the degree centralities in the BS Net and BB Net reflect the two-sided effects on banks’ risk-taking behavior.

Suggested Citation

  • Li, Bing & Li, Changhong & Wang, Li, 2019. "Does the shareholding network affect bank's risk-taking behavior? An exploratory study on Chinese commercial banks," Finance Research Letters, Elsevier, vol. 31(C).
    • Handle: RePEc:eee:finlet:v:31:y:2019:i:c:s154461231830789x
    DOI: 10.1016/j.frl.2018.11.019
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    2. Zhang, Zhiwei & Wu, Fei, 2020. "Moral hazard, external governance and risk-taking: Evidence from commercial banks in China," Finance Research Letters, Elsevier, vol. 37(C).

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    More about this item

    Keywords

    Shareholding network; Bank performance; Social capital; Risk-taking behavior;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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