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Corporate governance and procyclicality in a banking crisis: Empirical evidence and implications

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  • Ibáñez-Hernández, Francisco J.
  • Peña-Cerezo, Miguel A.
  • Araujo-de-la-Mata, Andrés

Abstract

This paper presents our analysis of a complete financial data set on the population of Spanish deposit institutions for the last credit cycle. This information is combined with details about the characteristics of the corporate governance of the banks. Our results show that in a context of rapid credit growth (2002–2007), only financial institutions managed with political criteria have eventually experienced serious solvency problems (2008–2017) and have finally had to be bailed out with public resources. These results are particularly relevant for the establishment of appropriate prudential policies in countries where a government-owned banking system still exists.

Suggested Citation

  • Ibáñez-Hernández, Francisco J. & Peña-Cerezo, Miguel A. & Araujo-de-la-Mata, Andrés, 2019. "Corporate governance and procyclicality in a banking crisis: Empirical evidence and implications," Finance Research Letters, Elsevier, vol. 30(C), pages 271-275.
    • Handle: RePEc:eee:finlet:v:30:y:2019:i:c:p:271-275
    DOI: 10.1016/j.frl.2018.10.011
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    More about this item

    Keywords

    Financial crisis; Bank bailout; Procyclicality; Corporate governance; Politically motivated lending; Connected lending;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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