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Liberalization, Corporate Governance, and Savings Banks

Author

Listed:
  • Manuel Illueca

    (Universitat Jaume I (Spain), Department of Finance and Accounting)

  • Lars Norden

    (University of Mannheim (Germany), Department of Banking anf Finance)

  • Gregory F. Udell

    (Kelly School of Business, Indiana University)

Abstract

We study the effects of the interplay between banking deregulation and corporate governance on the lending behavior of savings banks in Spain. The removal of branching barriers that constrained these banks has led to a nationwide expansion, increasing the number of their branches and their commercial lending volume dramatically. Analyzing a unique data set combining information on the geographic distribution of bank branches and matched lenderborrower financial statements during 1996-2004, we provide evidence that suggests that the governance of those banks affects the way in which they expand their lending activities. In particular, political influence affects where they expand and their ex ante risk taking behavior. Because most countries have a portion of their banking system that is not privately owned, the behavior of these Spanish savings banks may have broader implications about the impact of global banking deregulation and industry consolidation and their interaction with bank governance.

Suggested Citation

  • Manuel Illueca & Lars Norden & Gregory F. Udell, 2009. "Liberalization, Corporate Governance, and Savings Banks," Mo.Fi.R. Working Papers 17, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
    • Handle: RePEc:anc:wmofir:17
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    File URL: http://docs.dises.univpm.it/web/quaderni/pdfmofir/Mofir017.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Christos Triantopoulos, 2014. "Financial Structure, Income Inequality and Privatization of Risk in the EU," SPOUDAI Journal of Economics and Business, SPOUDAI Journal of Economics and Business, University of Piraeus, vol. 64(3), pages 49-72, July-Sept.
    2. Tamyko Ysa & Mireia Giné & Marc Esteve & Vicenta Sierra, 2012. "Public corporate governance of state-owned enterprises: evidence from the Spanish banking industry," Public Money & Management, Taylor & Francis Journals, vol. 32(4), pages 265-272, July.
    3. Vicente, Cuñat & Luis, Garicano, 2010. "Did Good Cajas Extend Bad Loans? Governance, Human Capital and Loan Portfolios," MPRA Paper 42434, University Library of Munich, Germany.
    4. Emma García-Meca & Juan Sánchez-Ballesta, 2014. "Politicization, banking experience and risk in savings banks," European Journal of Law and Economics, Springer, vol. 38(3), pages 535-553, December.
    5. Benjamin A. Abugri & Theophilus T. Osah, 2021. "Derivative use, ownership structure and lending activities of US banks," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 45(1), pages 146-170, January.
    6. Foos, Daniel & Norden, Lars & Weber, Martin, 2010. "Loan growth and riskiness of banks," Journal of Banking & Finance, Elsevier, vol. 34(12), pages 2929-2940, December.
    7. Manuel Illueca & José Pastor & Emili Tortosa-Ausina, 2009. "The effects of geographic expansion on the productivity of Spanish savings banks," Journal of Productivity Analysis, Springer, vol. 32(2), pages 119-143, October.
    8. Maixe-Altes, J. Carles, 2011. "Governance in Spanish Savings Banks. A Historical Perspective," MPRA Paper 29535, University Library of Munich, Germany.
    9. International Monetary Fund, 2012. "Spain: The Reform of Spanish Savings Banks Technical Notes," IMF Staff Country Reports 2012/141, International Monetary Fund.
    10. Imai, Masami, 2012. "Local economic effects of a government-owned depository institution: Evidence from a natural experiment in Japan," Journal of Financial Intermediation, Elsevier, vol. 21(1), pages 1-22.
    11. Imbierowicz, Björn & Rauch, Christian, 2014. "The relationship between liquidity risk and credit risk in banks," Journal of Banking & Finance, Elsevier, vol. 40(C), pages 242-256.
    12. Izaskun Agirre Aramburu & Irune Gómez Pescador, 2019. "The Effects of Corporate Social Responsibility on Customer Loyalty: The Mediating Effect of Reputation in Cooperative Banks Versus Commercial Banks in the Basque Country," Journal of Business Ethics, Springer, vol. 154(3), pages 701-719, February.

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    More about this item

    Keywords

    Banck branching; Bank lending; Deregulation; Distance; Geographic expansion;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • L30 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - General

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