Goverment ownership of savings banks: effect on the efficiency and the risk-taking behavior.

Abstract

The study of the effect that the peculiar government of the savings banks has on the levels of efficiencyand risk of the above mentioned entities has not provoked, up to the date, great interest, in spite of theimportance that these institutions have in the stability of the financial system. That's why, in this paper an initial analysis is realized on the above mentioned effects which it is focused on the weight of the public participation in savings banks' ownership. The analysed evidence shows a lesser efficiency associated with a higher is the politization of the savings banks'government, whereas increases in the participation of the public administrations in the control of these institutions is associated with increases in the level of risk. The design of the legislation of the savings banks'government demands to keep in mind, therefore, the consequences that a higher or less public control could have on the stability and survival of these institutions and, in last instance, on the stability of the financial system there can have.