Federal Reserve Bank of Chicago & Fellow, Wharton Financial Institution Center

We employ daily data from the Chilean banking industry for the 1994-2001 period to estimate the impact of cross-industry ownership structure within financial conglomerates on the pricing behavior of deposit and lending operations of banking institutions. Controlling for bank specific fixed effects, and for bank and market characteristics, we test whether banks with a pension fund affiliation had overall different pricing strategies with respect to non-affiliated banks, whether these banks display a different response to monetary policy changes and whether they reacted differently during the 1998 liquidity shock to the Chilean economy. Preliminary evidence suggests that banks with pension fund affiliation display a broader deposit and loan base and enjoy higher spreads, but they seem to react similarly to monetary policy changes with respect to non-affiliated banks. Finally, the evidence collected for the period around the liquidity shock suggest that banks with pension fund affiliation enjoyed some degree of insulation from market events, attracting a larger share of funds at the expense of other banks. * The views expressed herein are those of the authors and not necessarily those of the Banco Central d