Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/320430 
Year of Publication: 
2025
Series/Report no.: 
Deutsche Bundesbank Discussion Paper No. 17/2025
Publisher: 
Deutsche Bundesbank, Frankfurt a. M.
Abstract: 
We construct a novel panel dataset on insider ownership for about 600 U.S. bank holding companies from 2003 to 2014 and evaluate whether ownership structure influences banks' equity composition and recapitalization decisions around the Global Financial Crisis (GFC). Before the crisis, banks with higher insider ownership relied less on common stock and more on retained earnings. Throughout the sample period, insider ownership changes little within banks. Following the onset of the GFC, banks with larger insider ownership sold significantly less common stock than comparable peers. This effect is more pronounced where insiders enjoy greater private benefits of control, as proxied by insider lending and earnings opacity. The findings suggest insiders are reluctant to dilute their shares and lose those private benefits. These results hold when employing instrumental variables for insider ownership. Our findings imply that ownership structure affects banks' equity issuances during crises, highlighting the importance of considering ownership when designing and evaluating regulatory reforms.
Subjects: 
Ownership Structure
Equity Issuances
Banking
Financial Crises
Regulation
JEL: 
G32
G21
G28
ISBN: 
978-3-98848-038-5
Document Type: 
Working Paper

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