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Competition, risk taking, and governance structures in retail banking

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Author Info
Luis M. Granero
Juan Carlos Reboredo

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Abstract

This paper investigates the extent to which the linkages between bank performance and governance structure affect deposits market competition and risk taking incentives when commercial banks compete with organizations with objectives different from profit maximization. These organizations include savings banks whose corporate and ownership structure yields an objective function that can incorporate labour expenses. It is found that such objective function enables the savings banks to capture a greater market share of bank deposits and to take on relatively less risk in their portfolio of investments. The empirical evidence from the Spanish retail banking sector documents these conclusions.

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Publisher Info
Article provided by Taylor and Francis Journals in its journal Applied Financial Economics Letters.

Volume (Year): 1 (2005)
Issue (Month): 1 (January)
Pages: 37-40
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Handle: RePEc:taf:apfelt:v:1:y:2005:i:1:p:37-40

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