versification by banks. The highestvalue indicates that such diversification is prohibited. We buildthree dummy variables from the BAOR index: Canada, France,Spain, and the UK have the lowest BAOR values, Italy is in the middle,and the US has the highest value. Official supervisory power(OSP) measures whether officials have the authority to take specificaction to prevent and correct problems. This measure rangesfrom 0 to 16. The higher the value, the more power officials have.We build three dummy variables from the OSP index: one each forCanada, France and Italy; Spain and the UK; and the US Prompt correctiveaction (PCA) measures whether laws establish predeterminedlevels of bank solvency that forces action by the
authorities. This measure ranges from 0 to 6. A higher value indicates
greater promptness to respond to problems. We build three
dummy variables from the PCA index: Canada, France, Italy, and
the UK; Spain; and the US Deposit insurance design (DID) takes
the value of one if it has a limit per person (Italy, Spain, and the
UK), two if the limit is by account (Canada and the US), and three
if it has both limits (France).Panel B: Bank deposits over GDP (TDGDP) measures the relevanceof the bank deposits in each country, and Bank concentration(BC5) measures the proportion of a country’s bank assets as reportedin the balance sheet of the five largest banks.Panel C: 5OWN04, 5OWN99 and 5OWN96 are dummy variablesthat take the value of one when the main shareholder holds lessthan 5% of the shares for 2004, 1999 and 1996 and 0 otherwise.In other words, there is no controlling shareholder in that year.CH&CEO is a dummy that takes the value of one when the Chairis also the CEO, and zero otherwise.
Panel D: Legal protection (ILP) measures the degree ofinvestorprotection. This measure ranges from 0 to 6.
Source: Beck et al. (2006b), La Porta et al. (1998), and BureauVan Dyck databases.
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