Competition and Agency Problems Within Banks: Evidence from Insider Lending

• 成果类型: Article
• 署名作者: Girotti, Mattia; Salvade, Federica
• 署名单位: European Central Bank; Bank of France
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2021.4043
• 发表日期: 2022
• 页码: 3791-3812
• 关键词: banks; Agency problems; private benefits; COMPETITION; insider loans

摘要

This paper studies whether greater competition can mitigate agency problems within banks. We measure the intensity of the agency conflict within a bank by the volume of loans that the bank lends to its insiders (e.g., executives). We first check that these loans are a form of private benefit. By exploiting interstate branching deregulation, we then show that banks react to greater competition by reducing insider lending, especially when the entry of new competitors may more strongly affect bank profitability. Results are robust to using various identification approaches and alternative indicators of agency conflict. We conclude that competitive pressure reduces managerial self-dealing.