Pyramidal group structure and bank risk in Thailand

This paper proposes risk sheltering as a further motivation of the pyramidal structure of banks. * Lower-tier banks tend to extend loans more aggressively and perform poorly, while upper-tier banks carry out more profitable investments. * The results suggest that the multilayer organizational structure of bank ownership can affect a bank's lending behavior and its resistance to economic shocks. This paper investigates how banks and finance companies operate in business groups. Using uniquely detailed ownership data from Thailand, we find that the controlling shareholders extensively use pyrami... Mehr ...