TY  - JOUR
AU  - Laeven,Luc
AU  - Levine,Ross
TI  - Bank Governance, Regulation, and Risk Taking
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14113
PY  - 2008
Y2  - June 2008
UR  - http://www.nber.org/papers/w14113
L1  - http://www.nber.org/papers/w14113.pdf
N1  - Author contact info:
Luc Laeven
Senior Economist
International Monetary Fund
700 19th Avenue, NW
Washington, DC 20431
Tel: 202/623-9020
Fax: 202/623-4740
E-Mail: Llaeven@imf.org

Ross Levine
Department of Economics
Brown University
64 Waterman Street
Providence, RI 02912
Tel: 401/863-2170
E-Mail: ross_levine@brown.edu
AB  - This paper conducts the first empirical assessment of theories concerning relationships among risk taking by banks, their ownership structures, and national bank regulations. We focus on conflicts between bank managers and owners over risk, and show that bank risk taking varies positively with the comparative power of shareholders within the corporate governance structure of each bank. Moreover, we show that the relation between bank risk and capital regulations, deposit insurance policies, and restrictions on bank activities depends critically on each bank's ownership structure, such that the actual sign of the marginal effect of regulation on risk varies with ownership concentration. These findings have important policy implications as they imply that the same regulation will have different effects on bank risk taking depending on the bank's corporate governance structure.
ER  -