Bank ownership and stability: Evidence from Germany

Thorsten Beck, Heiko Hesse, Thomas Kick, Natalja von Westernhagen , 9 May 2009

Issues of banking stability are currently intensively debated in Germany and elsewhere. This column looks at German banks and suggests that privately-owned banks are more profitable and better capitalised than savings and cooperative banks, but also take more risk. This higher risk taking results in higher default probability and higher “proximity to insolvency” of privately-owned banks.

Full Article: Bank ownership and stability: Evidence from Germany