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Complex ownership structures, banks' capital structure and performance

Abstract : This dissertation examines the role of ownership structure in explaining capital structure and performance of European commercial banks from 2002 to 2010. It comprises three empirical essays. The first chapter explores the effect of greater control rights than cash-flow rights of an ultimate owner on the bank’s capital ratio adjustment and its lending decisions. The results show that whenever control rights exceed cash-flow rights, banks do not issue equity to increase their capital ratio and, instead, downsize by mainly slowing their lending. Chapter 2 provides evidence on how the divergence between control and cash-flow rights affects bank profitability and risk during normal times and distress times. The findings emphasize that during normal times the divergence between control and cash-flow rights is associated with lower profitability and higher risk. Conversely, during the acute financial crisis period (2007-2008), such a divergence improves profitability and banks’ resilience to shocks. The third chapter takes into account differences in the strength of ownership network to which banks belong when assessing the effect of greater activity diversification on bank performance. The results show that diseconomies of diversification vanish the stronger is the ownership network surrounding the bank in the control chain. Such mitigating roles are attributable to the presence of domestic and foreign institutional owners in the pyramid.
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Nadia Zedek. Complex ownership structures, banks' capital structure and performance. Economics and Finance. Université de Limoges, 2014. English. ⟨NNT : 2014LIMO0005⟩. ⟨tel-01086707⟩

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