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Systemic risk in European banks: Does ownership structure matter?

Author

Listed:
  • Nadia Saghi-Zedek

    (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique)

  • Zainab Srour

    (RHU - Rafik Hariri University)

  • Jean-Laurent Viviani

    (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique)

  • Mohamad Jezzini

    (LU / ULB - الجامعة اللبنانية [بيروت] = Lebanese University [Beirut] = Université libanaise [Beyrouth])

Abstract

We empirically test whether ownership concentration explains the cross-variation in systemic risk contribution for a sample of European banks over the 2004–2021 period and how this effect may vary depending on the category of the largest controlling shareholder. We explore two potential contagion channels: the risk-taking incentives and banks' assets commonality. The results show that higher ownership concentration is associated with greater banks' systemic risk contribution. Moreover, we find that banks' systemic risk contribution is even stronger for banks where institutional investors or States are the largest controlling owners. Overall, our findings contribute to the literature examining the determinants of banks' systemic risk in particular and financial stability as a whole and have several policy implications. © 2023 Board of Trustees of the University of Illinois

Suggested Citation

  • Nadia Saghi-Zedek & Zainab Srour & Jean-Laurent Viviani & Mohamad Jezzini, 2023. "Systemic risk in European banks: Does ownership structure matter?," Post-Print hal-04227882, HAL.
    • Handle: RePEc:hal:journl:hal-04227882
    DOI: 10.1016/j.qref.2023.07.009
    Note: View the original document on HAL open archive server: https://hal.science/hal-04227882
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    Cited by:

    1. Bellardini, Luca & Murro, Pierluigi & Previtali, Daniele, 2024. "Measuring the risk appetite of bank-controlling shareholders: The Risk-Weighted Ownership index," Global Finance Journal, Elsevier, vol. 60(C).

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