Optimal level of state ownership in banks: prevention measure versus emergency action—evidence from the new millennia

Emilios Galariotis; Iordanis Kalaitzoglou; Jacek Niklewski; Constantin Zopounidis

doi:10.1007/s10479-021-04085-1

Optimal level of state ownership in banks: prevention measure versus emergency action—evidence from the new millennia

Emilios Galariotis
, Iordanis Kalaitzoglou^*
, Jacek Niklewski
, Constantin Zopounidis

^*Corresponding author for this work

Department of Accounting and Finance

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

Abstract

Previous literature is rather inconclusive concerning the impact of state ownership on banks. We report that its overall impact is not monotonic as it has so far been implicitly assumed, and that it depends on a contemporaneous conflicting impact on risk and financial performance. This suggests the existence of an optimal level, which we investigate by comparing the relative “overall performance” and efficiency of the institutions. We show that a minimal presence, as opposed to no state ownership can improve performance and efficiency, reduce the likelihood of a bailout, while it is less costly compared to capital injections.

Original language	English
Pages (from-to)	165-197
Number of pages	33
Journal	Annals of Operations Research
Volume	304
Issue number	1-2
DOIs	https://doi.org/10.1007/s10479-021-04085-1
State	Published - Sep 2021

Bibliographical note

Publisher Copyright:
© 2021, The Author(s), under exclusive licence to Springer Science+Business Media, LLC, part of Springer Nature.

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 10 Reduced Inequalities

Keywords

Bank efficiency
Indirect impact bank regulation
Macroeconomic shocks
Optimal level
State ownership

ASJC Scopus subject areas

General Decision Sciences
Management Science and Operations Research

Access to Document

10.1007/s10479-021-04085-1

Cite this

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title = "Optimal level of state ownership in banks: prevention measure versus emergency action—evidence from the new millennia",

abstract = "Previous literature is rather inconclusive concerning the impact of state ownership on banks. We report that its overall impact is not monotonic as it has so far been implicitly assumed, and that it depends on a contemporaneous conflicting impact on risk and financial performance. This suggests the existence of an optimal level, which we investigate by comparing the relative “overall performance” and efficiency of the institutions. We show that a minimal presence, as opposed to no state ownership can improve performance and efficiency, reduce the likelihood of a bailout, while it is less costly compared to capital injections.",

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AU - Niklewski, Jacek

AU - Zopounidis, Constantin

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KW - Indirect impact bank regulation

KW - Macroeconomic shocks

KW - Optimal level

KW - State ownership

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ER -

Optimal level of state ownership in banks: prevention measure versus emergency action—evidence from the new millennia

Abstract

Bibliographical note

UN SDGs

Keywords

ASJC Scopus subject areas

Access to Document

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Cite this