Browsing by Author "Caselli, Giorgio"

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    Monetary policy, ownership structure, and risk-taking at financial intermediaries
    (Wiley, 2022-11-07) Caselli, Giorgio; Figueira, Catarina
    This paper examines how ownership structure interacts with monetary policy in shaping financial intermediaries' appetite for risk. By constructing a large panel of banks across Western Europe, we provide evidence that differences in bank ownership influence the transmission of monetary policy via the risk-taking channel. While shareholder banks actively adjust the riskiness of their portfolios to changes in interest rates, stakeholder banks appear to be less responsive to such changes. These findings call for greater attention to the nature of bank ownership when setting monetary policy.
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    Ownership diversity and the risk-taking channel of monetary policy transmission
    (Cambridge University Press, 2020-07-04) Caselli, Giorgio; Figueira, Catarina; Nellis, Joseph G.
    This paper joins a rapidly growing body of literature that aims to uncover the link between monetary policy and bank risk taking. We investigate the hypothesis that the ownership composition of the banking system moderates monetary policy transmission via the risk-taking channel. Borrowing measures used in ecology to quantify diversity of species within an ecosystem and first applied to the field of finance by Michie, J. and Oughton, C. 2013. ‘Measuring Diversity in Financial Services Markets: A Diversity Index’, Centre for Financial and Management Studies Discussion Papers no. 113, this paper shows that the impact of exogenous monetary policy shocks on banks’ probability of default is reduced in countries with greater ownership diversity. We also find that—ceteris paribus—shareholder- and stakeholder-oriented banks located in more ownership-diverse systems tend to have a lower appetite for risk than their counterparts operating in less diverse markets. These results are robust across several econometric specifications and emphasise the stabilising role played by ownership diversity in modern financial systems. At the same time, our evidence suggests that a more interdisciplinary approach, firmly grounded in the applied, empirical research methodology, can provide novel and useful insights into the implications of monetary policy for financial and economic outcomes.
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    Ownership structure and the risk-taking channel of monetary policy
    (2017-09) Caselli, Giorgio; Figueira, Catarina
    Recent years have seen a growing interest in the implications of monetary policy for bank risk taking and financial stability. Yet, there has hitherto been limited attention on how ownership structure affects the relationship between monetary policy and bank risk. Drawing on three interconnected studies written as journal articles, this thesis provides novel insights into the role of banks in monetary policy transmission. First, it refines our understanding of the monetary transmission process via financial intermediaries. Based on a systematic review of 152 articles published during the 1963–2016 period, this research integrates a highly fragmented body of evidence into a multidimensional framework that combines the mechanisms of monetary transmission through financial institutions with the conditions underpinning the functioning of each mechanism. Second, this thesis incorporates concepts from the property rights and agency theory perspectives into the analysis of the risktaking channel. By building a sample of commercial, cooperative and savings banks from 17 Western European countries over the 1999–2011 period, this study finds that the impact of lower interest rates on bank risk taking is reduced for stakeholder banks relative to their shareholder counterparts. Third, this research contributes to the current debate about how to design a more stable and resilient financial system by introducing diversity measures from ecological theories into the study of the monetary policy–bank risk nexus. After estimating the ownership composition of the banking sector in terms of relative market shares of shareholder banks vis-`a-vis stakeholder banks, this work shows that the effects of unexpected monetary policy shocks on banks’ probability of default is dampened in countries with greater ownership diversity. Taken together, these findings advance knowledge in this field of enquiry by highlighting the need to account for differences in ownership structures when assessing the implications of the monetary environment for bank riskiness.