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Journal of Finance Vol. 45 No. 2 1990

Ownership Structure, Deregulation, and Bank Risk Taking

Anthony Saunders; Elizabeth Strock; Nickolaos G. Travlos1

1 Saunders is Professor of Finance, Graduate Business School, New York University and Research Advisor, Federal Reserve Bank of Philadelphia. Strock and Travlos are Assistant Professors of Finance, Wallace E. Carroll School of Management, Boston College. The authors would like to thank Linda Allen, Ya

Abstract

This paper investigates the relationship between bank ownership structure and risk taking. It is hypothesized that stockholder controlled banks have incentives to take higher risk than managerially controlled banks and that these differences in risk become more pronounced in periods of deregulation. In support of this hypothesis, we show that stockholder controlled banks exhibit significantly higher risk taking behavior than managerially controlled banks during the 1979–1982 period of relative deregulation.

DOI
10.1111/j.1540-6261.1990.tb03709.x
Volume
45
Issue
2
Pages
643-654
Language
en
Sources
openalex crossref

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