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Implications of Basel II for Different Bank Ownership Patterns in Europe

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  • Santiago Carbó-Valverde

Abstract

This paper explains that Basel II has different implications for stakeholder-owned (mutual) and stockholder banks in the European Union. Some strategic paths for stakeholder-owned banks are proposed as a response to the Stockholder Value Maximization goals Basel II implicitly advances. Even though empirical evidence indicates that capital strength and risk-taking exposures do not differ across bank ownership structures, SME lending and other characteristic specializations of stakeholder banks promise to generate high capital charges. However, improved corporate-governance practices and cooperative securitization and risk-management activities can reduce the compliance costs and risk-taking constraints mutual banks might experience from shifting to a Stakeholder Value Maximization Model. For all EU banks irrespective of their ownership structure, the analysis stresses that establishing an incentive-compatible cross-country safety-net scheme poses a critical challenge. Copyright International Atlantic Economic Society 2007

Suggested Citation

  • Santiago Carbó-Valverde, 2007. "Implications of Basel II for Different Bank Ownership Patterns in Europe," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 35(4), pages 391-397, December.
    • Handle: RePEc:kap:atlecj:v:35:y:2007:i:4:p:391-397
    DOI: 10.1007/s11293-007-9088-4
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    References listed on IDEAS

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    1. Maudos, Joaquin & Pastor, Jose M. & Perez, Francisco & Quesada, Javier, 2002. "Cost and profit efficiency in European banks," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 12(1), pages 33-58, February.
    2. Altunbas, Y. & Gardener, E. P. M. & Molyneux, P. & Moore, B., 2001. "Efficiency in European banking," European Economic Review, Elsevier, vol. 45(10), pages 1931-1955, December.
    3. Santiago Carbo-Valverde & Edward Kane & Francisco Rodriguez-Fernandez, 2008. "Evidence of Differences in the Effectiveness of Safety-Net Management in European Union Countries," Journal of Financial Services Research, Springer;Western Finance Association, vol. 34(2), pages 151-176, December.
    4. Santiago Carbó Valverde & David Humphrey & Rafael López del Paso, 2007. "Opening the black box: Finding the source of cost inefficiency," Journal of Productivity Analysis, Springer, vol. 27(3), pages 209-220, June.
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    More about this item

    Keywords

    Capital adequacy; Bank ownership; Regulation; G21; E52;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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