Organizational Form and Expense Preference: Spanish Experience

Abstract

-This article investigates the effect of alternative ownership structures, stock versus mutual, on the cost of production of Spanish depository institutions. The empirical approach adjusts for the possibility that the two sectors of the banking industry employ different production technologies and find evidence that is consistent with the expense preference behavior by the mutual savings banks.

Risk-taking behaviour and ownership in the banking industry: The Spanish evidence

“…The studies carried out indicate that SSBs achieve profitability levels similar to those of SCBs. Also, SSBs have gained market share in retail banking during the period under study (Hasan & Lozano, 2002;Salas & Saurina, 2002). However, the differences in behaviour in the face of risk has barely been analysed for this type of entity.…”

Are cooperatives the weakest link in European banking? A non-parametric metafrontier approach

“…Hasan and Lozano-Vivas (2002) using data for Spanish depository institutions find that mutual banking firms suffer from higher cost inefficiency than their stock-owned competitors supporting the hypothesis of expense-preference behaviour of mutual management. In contrast, a very recent study by Girardone et al (2009) rejects the hypothesis that mutual banking firms are more cost inefficient relative to stock-owned banking firms, based on frontier analysis results for commercial, savings and cooperative banking firms operating in the EU15 banking market.…”

Mutual and Social Efficiency of Italian Co-Operative Banks: An Empirical Analysis

“…Furthermore, studies dealing with CBs’ efficiency usually estimate a common frontier without accounting for country regional differences (e.g. Altunbas et al , , Hasan and Lozano‐Vivas , Maudos et al , Girardone et al , , Weill ).…”