Peer Monitoring, Eigentümerstruktur und die Stabilität von Banken - Eine empirische Analyse für den deutschen genossenschaftlichen Bankensektor
Recent research highlights the issue of banks which are Too Big to Fail. However, the stability of a large number of small banks is not less important for the stability of financial systems. This argument raises the issue of Too Many to Fail. The German cooperative banking group consists of such a large number of small banks with homogenous business models. This paper analyzes empirically whether the German cooperative banks are monitored within their closed cooperative interbank market – or not –, and the implications of this special market concerning network stability. Thereby, it provides deep insights into the German banking system, which have implications for supervisory and regulatory actions. Based on the analysis of 1,011 German cooperative banks from 2004 – 2013, and using among others dynamic panel data techniques, there are three main findings: (i) the cooperative central banks do monitor the network member banks, (ii) the interbank market and the special ownership characteristics are transmission channels of stability, but as well of instability, and (iii) the stability of the majority of small cooperative banks cannot clearly be improved by diversification of earnings.
Cooperative banks; Corporate Governance; diversification; regulation