IDEAS home Printed from https://ideas.repec.org/a/trn/csnjrn/v3i1p35-55.html
   My bibliography  Save this article

Organizational Structure and Exposure to Crisis among European Banks: Evidence from Rating Changes

Author

Listed:
  • Giovanni Ferri

    () (LUMSA University Rome)

  • Panu Kalmi

    () (University of Vaasa, Finland)

  • Eeva Kerola

    () (Dept. of Economics, AALTO University School of Business, Helsinki)

Abstract

The Great Crisis that started in 2007 deeply affected banks throughout Europe. Using the assessments of the two global agencies that publish ratings of the financial strength of individual banks, we study whether the crisis hit European banks differently depending on their organizational structure. We analyze the changes in the ratings during the crisis and how they are related to bank ownership. Our results lend support to the hypothesis that stakeholder banks, especially cooperative banks, were downgraded to a lesser degree than shareholder banks. However, the results differ somewhat across the rating agencies. We also discuss the sources of ratings disagreements in the paper. Our paper is among the first presenting statistically based evidence on the relative merits of different organizational structures during the recent financial and economic crisis.

Suggested Citation

  • Giovanni Ferri & Panu Kalmi & Eeva Kerola, 2014. "Organizational Structure and Exposure to Crisis among European Banks: Evidence from Rating Changes," Journal of Entrepreneurial and Organizational Diversity, European Research Institute on Cooperative and Social Enterprises, vol. 3(1), pages 35-55, June.
  • Handle: RePEc:trn:csnjrn:v:3:i:1:p:35-55
    as

    Download full text from publisher

    File URL: http://www.jeodonline.com/sites/jeodonline.com/files/articles/2014/06/17/3ferri-kalmi-kerola.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Marc-André Flageole & Jean Roy, 2005. "Rating cooperative and commercial bank bonds: a comparative approach," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 76(3), pages 407-435, September.
    2. Johnston Birchall, 2013. "The potential of co-operatives during the current recession; theorizing comparative advantage," Journal of Entrepreneurial and Organizational Diversity, European Research Institute on Cooperative and Social Enterprises, pages 1-22.
    3. Iannotta, Giuliano & Nocera, Giacomo & Sironi, Andrea, 2013. "The impact of government ownership on bank risk," Journal of Financial Intermediation, Elsevier, pages 152-176.
    4. Poon, Winnie P. H. & Firth, Michael & Fung, Hung-Gay, 1999. "A multivariate analysis of the determinants of Moody's bank financial strength ratings," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 9(3), pages 267-283, August.
    5. Michel Normandin & Pascal St-Amour, 2005. "Recursive measures of total wealth and portfolio return," Applied Financial Economics, Taylor & Francis Journals, vol. 15(4), pages 287-291.
    6. Harald Hau & Sam Langfield & David Marques-Ibanez, 2013. "Bank ratings: what determines their quality?," Economic Policy, CEPR;CES;MSH, pages 289-333.
    7. Harald Hau & Marcel Thum, 2009. "Subprime crisis and board (in-) competence: private versus public banks in Germany," Economic Policy, CEPR;CES;MSH, vol. 24, pages 701-752, October.
    8. Harald Hau & Marcel Thum, 2009. "Subprime Crisis and Board (In-)Competence: Private vs. Public Banks in Germany," CESifo Working Paper Series 2640, CESifo Group Munich.
    9. Caporale, Guglielmo Maria & Matousek, Roman & Stewart, Chris, 2012. "Ratings assignments: Lessons from international banks," Journal of International Money and Finance, Elsevier, vol. 31(6), pages 1593-1606.
    10. Iannotta, Giuliano & Nocera, Giacomo & Sironi, Andrea, 2007. "Ownership structure, risk and performance in the European banking industry," Journal of Banking & Finance, Elsevier, vol. 31(7), pages 2127-2149, July.
    11. Martin Desrochers & Klaus P. Fischer, 2005. "The Power of Networks: Integration and Financial Cooperative Performance," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 76(3), pages 307-354, September.
    12. Giuseppe Coco & Giovanni Ferri, 2010. "From shareholders to stakeholders finance: a more sustainable lending model," International Journal of Sustainable Economy, Inderscience Enterprises Ltd, vol. 2(3), pages 352-364.
    13. John, Kose & John, Teresa A. & Senbet, Lemma W., 1991. "Risk-shifting incentives of depository institutions: A new perspective on federal deposit insurance reform," Journal of Banking & Finance, Elsevier, vol. 15(4-5), pages 895-915, September.
    14. Giuliano Iannotta & Giacomo Nocera & Andrea Sironi, 2007. "Ownership structure, risk and performance in the European banking industry," Post-Print hal-00861806, HAL.
    15. Donald P. Morgan, 2002. "Rating Banks: Risk and Uncertainty in an Opaque Industry," American Economic Review, American Economic Association, pages 874-888.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sääskilahti, Jaakko, 2016. "Local bank competition and small business lending after the onset of the financial crisis," Journal of Banking & Finance, Elsevier, vol. 69(C), pages 37-51.
    2. Giovanni Ferri & Angelo Leogrande, 2015. "Was the Crisis Due to a Shift from Stakeholder to Shareholder Finance? Surveying the Debate," Euricse Working Papers 1576, Euricse (European Research Institute on Cooperative and Social Enterprises).
    3. Marcelo Vieta & Doug Lionais, 2015. "Editorial: The Cooperative Advantage for Community Development," Journal of Entrepreneurial and Organizational Diversity, European Research Institute on Cooperative and Social Enterprises, vol. 4(1), pages 1-10, August.
    4. Giovanni Ferri & Angelo Leogrande, 2015. "Was the Crisis Due to a Shift from Stakeholder to Shareholder Finance? Surveying the Debate," Euricse Working Papers 1576, Euricse (European Research Institute on Cooperative and Social Enterprises).

    More about this item

    Keywords

    european banking; shareholder banks; cooperative banks; savings banks; performance; credit rating agencies;

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • G3 - Financial Economics - - Corporate Finance and Governance
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • P1 - Economic Systems - - Capitalist Systems

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:trn:csnjrn:v:3:i:1:p:35-55. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Fabio Sabatini). General contact details of provider: http://edirc.repec.org/data/euricit.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.