TAILIEUCHUNG - RISK-TAKING BEHAVIOUR AND OWNERSHIP IN THE BANKING INDUSTRY: THE SPANISH EVIDENCE

To complement investment climate improvements and to help unleash supply response, direct support is sometimes appropriate for formal small and medium firms as well as entrepreneurs in informal settings, for example, in rural areas. Such support may comprise both finance and advice, for example, rural credit and extension services. Several decades of attempts to provide such support have shed light on the key success factors. First and foremost, successful direct support to firms requires a sound investment climate that provides incentives to use public support well. Second, both financial and advisory support needs to be aligned. | RISK-TAKING BEHAVIOUR AND OWNERSHIP IN THE BANKING INDUSTRY THE SPANISH EVIDENCE Teresa García Marco Department of Business Administration Public University of Navarre Campus de Arrosadía s n 31006 Pamplona SPAIN E-mail tgmarco@ Phone 34 48 169491 Fax 34 48 169404 M. Dolores Robles Fernández Department of Foundations of Economic Analysis II Complutense University Campus de Somosaguas 28223 Madrid SpAiN E-mail mdrobles@ Phone 34 913942247 Fax 34 913942613 Abstract This paper analyses the determinants of risk-taking in the Spanish financial intermediaries with special emphasis on the ownership structure and size of the different entities. On the one hand the specific legal configuration of Spanish Savings banks may lead them to differ from Commercial banks in their risk behaviour. In particular they may make riskier investments. Nevertheless other theories indicate that greater stockholder control in Commercial banks may induce them towards greater risk-taking in certain situations. In this paper we test these hypotheses with a dynamic panel data model 1993-2000 for Spanish Commercial banks and Savings banks. We analyse whether differences in risk behaviour are related to different ownership structures or to other factors such as the size of the entity. Key Words Commercial banks Savings banks corporate control ownership structure bank risk-taking JEL Classification C33 G21 G32 We are grateful to A. Novales and EFMA 2004 Congress participants for many helpful comments. We acknowledge support from the Spanish Ministry of Science and Technology through grants SEC2003-06457 and BEC2003-03965. Correspondence to authors RISK-TAKING BEHAVIOUR AND OWNERSHIP IN THE BANKING INDUSTRY THE SPANISH EVIDENCE Abstract This paper analyses the determinants of risk-taking in the Spanish financial intermediaries with special emphasis on the ownership structure and size of the different entities. On the one hand the specific legal configuration of Spanish Savings .

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