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- Title
GOVERNANCE-BASED ACQUISITIONS AND RISK TAKING IN BANKING.
- Authors
BARRIOS, VÍCTOR E.; GRANERO, LUIS M.
- Abstract
We examine the market for corporate control in banking when strategic acquisitions are driven by the different governance structures of commercial and savings banks. In contrast to profit-maximizing entities, we show that savings institutions can have acquisition incentives from their peculiar governance and ownership structure. Governance-based acquisition incentives, which interact with the specifics of the loan market in affecting bank risk taking, can arise when acquisitions take place sequentially or simultaneously, and also when financial intermediaries affect risk taking directly through the target return of investments or indirectly through the loan interest rate.
- Subjects
BANKING industry; MERGERS &; acquisitions; SAVINGS banks; PROFIT maximization; LABOR incentives; LOAN servicing; FINANCIAL institutions; RATE of return; INTEREST rates
- Publication
Manchester School (1463-6786), 2008, Vol 76, Issue 4, p369
- ISSN
1463-6786
- Publication type
Article
- DOI
10.1111/j.1467-9957.2008.01065.x