Have crisis-induced banking supports influenced European bank performance, resilience and price discovery?

The ownership structures of European banks are today quite different relative to those before the Global Financial Crisis (GFC), particularly due to new takeovers, government guarantees, bailouts, and other defencive market responses post-GFC. These new ownership structures raise questions as to how these banks have performed, particularly during the implementation of non-standard central bank monetary policies in response to crises that have occurred since the GFC. This paper develops a time-varying series of changing government, private and public bank ownership structures, and compares the performance of several major European banking institutions during periods of crises and mitigating central bank actions. We specifically evaluate as to whether crisis-driven changes of ownership structure have influenced the corporate performance, resilience and signals of price discovery generated by these institutions? The COVID-19 pandemic is identified and used as an example of an idiosyncratic shock on which testing procedures are implemented. Significant differentials within the European banking system based on government supports are identified. The data examined show that the information share of price discovery among government-supported European banks is significantly higher in non-crisis periods than non-government supported banks. We present several companion tests consistent with this evidence and discuss a variety of implications for future research and policy.