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Banques universelles et participations des banques dans le capital des entreprises : Quelles conséquences sur le risque bancaire ?

Author

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  • Laetitia Lepetit

    (LAPE - Laboratoire d'Analyse et de Prospective Economique - GIO - Gouvernance des Institutions et des Organisations - UNILIM - Université de Limoges)

Abstract

This paper analyses the implications of bank equity investment in firms on the stability of the banking system under conditions of asymmetric information and moral hazard. We show that there exists a " U-shaped " relationship between the risk of the universal and the investment banks' asset and the level of their equity investment. Our theoretical and empirical results end up in favour of the choice of the European, Japan and American regulators who forbid banks from exceeding a threshold of equity investment. Such regulation must prevent banks to take excessive risks

Suggested Citation

  • Laetitia Lepetit, 2003. "Banques universelles et participations des banques dans le capital des entreprises : Quelles conséquences sur le risque bancaire ?," Post-Print hal-00795844, HAL.
    • Handle: RePEc:hal:journl:hal-00795844
    DOI: 10.3917/reco.544.0857
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    Cited by:

    1. Laetitia Lepetit & Frank Strobel, 2012. "Bank equity Involvement in Industrial Firms and Bank Risk," Working Papers hal-00916709, HAL.
    2. Mahrt-Smith, Jan, 2006. "Should banks own equity stakes in their borrowers? A contractual solution to hold-up problems," Journal of Banking & Finance, Elsevier, vol. 30(10), pages 2911-2929, October.

    More about this item

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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