Falling under the control of a different type of owner : risk-taking implications for Banks

Thierno Barry (1) , Amine Tarazi (1) , Paul Wachtel (2)

1 LAPE - Laboratoire d'Analyse et de Prospective Economique
2 NYU - New York University [New York]

European banks have experienced significant changes in the type of entity that owns them (another bank, an individual or a family, a non-financial company, an institutional investor, a government, a foreign entity, a domestic entity…). In this paper, we look at the influence of ownership type changes on performance. Working with a panel of commercial banks from 17 European countries, we find that although banks that experience a change in ownership type do not exhibit lower or higher risk or profitability than other banks, their risk and profitability is significantly affected after the change takes place. The type of the acquirer plays a significant role in explaining the observed changes. When the acquirer is a non-financial company, the state or an institutional investor, the level of risk increases after the change while the level of profitability remains unchanged. Conversely, when the acquirer is a bank, we find that the level of risk-adjusted profitability decreases. Banks acquired by a different type of owner during the global financial crisis do not perform better or worse than they did before.

Mots clés: European banking; ownership change; type of ultimate owner; profitability; risk

Domaines: Economies et finances

Thierno Barry, Amine Tarazi, Paul Wachtel. Falling under the control of a different type of owner : risk-taking implications for Banks. 2016. ⟨hal-01333492⟩