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Liberalization and Risk-Taking: Evidence from Government-Controlled Banks

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Standard Standard

Liberalization and Risk-Taking: Evidence from Government-Controlled Banks. / Illueca, M.; Norden, L.; Udell, G.
In: Review of Finance, Vol. 18, No. 4, 15.07.2014, p. 1217-1257.

Research output: Contribution to journal › Article › peer-review

HarvardHarvard

Illueca, M, Norden, L & Udell, G 2014, 'Liberalization and Risk-Taking: Evidence from Government-Controlled Banks', Review of Finance, vol. 18, no. 4, pp. 1217-1257. https://doi.org/10.1093/rof/rft023

APA

Illueca, M., Norden, L., & Udell, G. (2014). Liberalization and Risk-Taking: Evidence from Government-Controlled Banks. Review of Finance, 18(4), 1217-1257. https://doi.org/10.1093/rof/rft023

CBE

Illueca M, Norden L, Udell G. 2014. Liberalization and Risk-Taking: Evidence from Government-Controlled Banks. Review of Finance. 18(4):1217-1257. https://doi.org/10.1093/rof/rft023

MLA

Illueca, M., L. Norden and G. Udell. "Liberalization and Risk-Taking: Evidence from Government-Controlled Banks". Review of Finance. 2014, 18(4). 1217-1257. https://doi.org/10.1093/rof/rft023

VancouverVancouver

Illueca M, Norden L, Udell G. Liberalization and Risk-Taking: Evidence from Government-Controlled Banks. Review of Finance. 2014 Jul 15;18(4):1217-1257. Epub 2013 Jul 25. doi: 10.1093/rof/rft023

Author

Illueca, M. ; Norden, L. ; Udell, G. / Liberalization and Risk-Taking: Evidence from Government-Controlled Banks. In: Review of Finance. 2014 ; Vol. 18, No. 4. pp. 1217-1257.

RIS

TY - JOUR

T1 - Liberalization and Risk-Taking: Evidence from Government-Controlled Banks

AU - Illueca, M.

AU - Norden, L.

AU - Udell, G.

PY - 2014/7/15

Y1 - 2014/7/15

N2 - We study the effects of the interplay between deregulation and governance on risk-taking in the financial industry. We consider the removal of regulatory geographic constraints for savings banks in Spain, the cajas, which led to a nationwide expansion of these banks during the past two decades. Based on a unique dataset that combines information on the geographic distribution of bank lending, matched lender-borrower financial statements, and borrower defaults, we find that the governance of the savings banks significantly affects the way in which they expand their lending activities. Savings banks that are subject to political influence by regional governments exhibit higher ex ante risk-taking and higher ex post loan defaults. Our study highlights the broader implications of the impact of global deregulation and consolidation and their interaction with governance issues.

AB - We study the effects of the interplay between deregulation and governance on risk-taking in the financial industry. We consider the removal of regulatory geographic constraints for savings banks in Spain, the cajas, which led to a nationwide expansion of these banks during the past two decades. Based on a unique dataset that combines information on the geographic distribution of bank lending, matched lender-borrower financial statements, and borrower defaults, we find that the governance of the savings banks significantly affects the way in which they expand their lending activities. Savings banks that are subject to political influence by regional governments exhibit higher ex ante risk-taking and higher ex post loan defaults. Our study highlights the broader implications of the impact of global deregulation and consolidation and their interaction with governance issues.

U2 - 10.1093/rof/rft023

DO - 10.1093/rof/rft023

M3 - Article

VL - 18

SP - 1217

EP - 1257

JO - Review of Finance

JF - Review of Finance

SN - 1572-3097

IS - 4

ER -