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Systemic risk and ownership structure of Eu-banks

Giovanni Cardillo, Matteo Cotugno, Giuseppe Torluccio
September 2020 - n. 9
Keywords: Rischio sistemico e assetti proprietari delle banche europee
Jel codes: G20, G21, G32, G33

The recent pandemic, the Us financial crisis, and the sovereign debt crisis demonstrated how it is essential to monitor systemic risk. Efficient banks contribute the economic growth and the real economy. In this context, the minimization of agency costs becomes necessary for the banking system’s development and stability to ensure efficient resource allocation. Using a sample of Eu-banks ownership structure, this article has a twofold aim: studying the relationship between bank ownership structure and systemic risk and identifying the mechanism behind it. Our results show that banks with a more concentrated ownership structure contribute less to the overall systemic risk in line with the agency costs theory. Furthermore, the credit risk is the main channel through which the ownership structure affects the Eu-banks systemic risk.

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