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The subsidiarity principle and the negative spread. A case in point for the governance of state-owned banks

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  • Rodolfo Apreda

Abstract

This paper sets forth a new perspective to address some problems that arise from the mixed governance nature of a state-owned bank. Firstly, it stresses that the principle of subsidiarity is at the root of decision-making processes in which the bank involves itself on the grounds of political demands. Secondly, it focuses on the uses and misuses of the principle of subsidiarity, putting forward the notion of the subsidiarity portfolio to redress misuses and enhance the governance of these institutions. Next, it defines the assets and liabilities portfolios of the bank and, by means of a break-even analysis of those portfolios'returns, inclusive of the costs-benefit structure, it introduces the rate of subsidiarity. Afterwards it moves on to the negative spread to measure up how far the subsidiarity abuse acts upon the return and costs-benefit structure of the bank. Lastly, it enlarges about likages between risk and subsidiarity on the one hand, and quasi-fiscal activities on the other hand.

Suggested Citation

  • Rodolfo Apreda, 2005. "The subsidiarity principle and the negative spread. A case in point for the governance of state-owned banks," CEMA Working Papers: Serie Documentos de Trabajo. 308, Universidad del CEMA.
  • Handle: RePEc:cem:doctra:308
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    File URL: http://www.ucema.edu.ar/publicaciones/download/documentos/308.pdf
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    References listed on IDEAS

    as
    1. Rodolfo Apreda, 2005. "Public Governance. A Blueprint for Political Action and Better Government," CEMA Working Papers: Serie Documentos de Trabajo. 297, Universidad del CEMA.
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    More about this item

    Keywords

    subsidiarity; governance; state-owned banks; spread; quasi-fiscal activities;

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • H1 - Public Economics - - Structure and Scope of Government
    • G3 - Financial Economics - - Corporate Finance and Governance

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