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Ownership, Governance Structure and Government Bailout

In: The Key Code and Advanced Handbook for the Governance and Supervision of Banks in Australia

Author

Listed:
  • Francesco de Zwart

    (University of Adelaide)

Abstract

This Chapter 28 examines bank ownership, governance structure and government bailout. We identify that bank size and leverage is related to the probability of bailout. We examine the ‘maturity transformation’ of bank debt and the consequent reliance for banks on a continuous supply of liquidity. Further governance variables are constructed for the level of interconnectedness of banks (high) and its effects on risk-taking and the effects on risk-taking of both the level of systemic risk and increases in bank size. We find that a controlling shareholder is predictive of greater risk and bailout and we examine the relationship between stronger governance, market valuation and performance. We also examine a high level of bank governance and the consequent effects of risk-taking on bank performance (non-crisis periods) and bank value (again, non-crisis periods). We identify that more independent boards with high institutional ownership performed worse in the crisis. We review the existing board independence variables and a new variable for a high level of institutional ownership and its effects on risk-taking. We conclude with an examination of country-level governance.

Suggested Citation

  • Francesco de Zwart, 2022. "Ownership, Governance Structure and Government Bailout," Springer Books, in: The Key Code and Advanced Handbook for the Governance and Supervision of Banks in Australia, edition 1, chapter 0, pages 805-816, Springer.
    • Handle: RePEc:spr:sprchp:978-981-16-1710-2_28
    DOI: 10.1007/978-981-16-1710-2_28
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