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Governance makes a difference: A case study of the German Landesbanken Helaba and WestLB

In: Public Banks in the Age of Financialization

Author

Listed:
  • Xeniya Polikhronidi
  • Christoph Scherrer

Abstract

The authors analyze the impact of governance structures on the performance of public banks by comparing an ambitious but ultimately failing Landesbank (WestLB) with a more prudent and so-far successful Landesbank (Helaba). By applying a multi-theoretical perspective, they find that the governance of these banks differed remarkably in terms of processes, which may explain the different fate of these Landesbanken to a large extent. While both banks suffered a major crisis in the 1970s, the owners of Helaba learned their lesson and set up a governance structure characterized by strict control and monitoring mechanisms. They also upheld the commitment to a public mandate. At WestLB, this commitment was dropped and the governance structure left management with a very high degree of autonomy.

Suggested Citation

  • Xeniya Polikhronidi & Christoph Scherrer, 2017. "Governance makes a difference: A case study of the German Landesbanken Helaba and WestLB," Chapters, in: Christoph Scherrer (ed.), Public Banks in the Age of Financialization, chapter 11, pages 195-211, Edward Elgar Publishing.
    • Handle: RePEc:elg:eechap:17305_11
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