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Does the impact of board independence on large bank risks change after the global financial crisis?

Francesco Vallascas, Sabur Mollah, Kevin Keasey

Journal of Corporate Finance, Volume: 44, Pages: 149 - 166

Swansea University Author: Sabur Mollah

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DOI (Published version): 10.1016/j.jcorpfin.2017.03.011

Abstract

The view that the independent directors of large banks should contribute to safeguarding the interests of bank creditors and taxpayers, by exercising a stringent risk oversight of bank executives, has gained ground in the aftermath of the 2007-2009 crisis. Using a cross-country sample of large banks...

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Published in: Journal of Corporate Finance
ISSN: 09291199
Published: 2017
Online Access: Check full text

URI: https://cronfa.swan.ac.uk/Record/cronfa38245
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first_indexed 2018-01-22T19:49:41Z
last_indexed 2019-07-24T15:08:29Z
id cronfa38245
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spelling 2019-07-24T11:28:01.8316507 v2 38245 2018-01-22 Does the impact of board independence on large bank risks change after the global financial crisis? 7bf64278ced3687f26a4b5d73dd4696c Sabur Mollah Sabur Mollah true false 2018-01-22 BAF The view that the independent directors of large banks should contribute to safeguarding the interests of bank creditors and taxpayers, by exercising a stringent risk oversight of bank executives, has gained ground in the aftermath of the 2007-2009 crisis. Using a cross-country sample of large banks for the period 2004-2014, we show that post 2009 an increase in board independence leads to more prudent bank risk-taking compared to the rest of the sample period. This effect materializes via independent boards favoring increases in bank capitalization and decreases in bank portfolio risk after the global crisis. Additional analyses demonstrate, however, that these results do not hold for all large banks in our sample but are confined to the group of banks benefiting from a government bailout during the crisis. In most large international banks board independence does not contribute to safeguarding the interests of bank creditors and taxpayers by constraining bank risk-taking. Journal Article Journal of Corporate Finance 44 149 166 09291199 30 6 2017 2017-06-30 10.1016/j.jcorpfin.2017.03.011 COLLEGE NANME Accounting and Finance COLLEGE CODE BAF Swansea University 2019-07-24T11:28:01.8316507 2018-01-22T16:53:34.2011257 Francesco Vallascas 1 Sabur Mollah 2 Kevin Keasey 3
title Does the impact of board independence on large bank risks change after the global financial crisis?
spellingShingle Does the impact of board independence on large bank risks change after the global financial crisis?
Sabur Mollah
title_short Does the impact of board independence on large bank risks change after the global financial crisis?
title_full Does the impact of board independence on large bank risks change after the global financial crisis?
title_fullStr Does the impact of board independence on large bank risks change after the global financial crisis?
title_full_unstemmed Does the impact of board independence on large bank risks change after the global financial crisis?
title_sort Does the impact of board independence on large bank risks change after the global financial crisis?
author_id_str_mv 7bf64278ced3687f26a4b5d73dd4696c
author_id_fullname_str_mv 7bf64278ced3687f26a4b5d73dd4696c_***_Sabur Mollah
author Sabur Mollah
author2 Francesco Vallascas
Sabur Mollah
Kevin Keasey
format Journal article
container_title Journal of Corporate Finance
container_volume 44
container_start_page 149
publishDate 2017
institution Swansea University
issn 09291199
doi_str_mv 10.1016/j.jcorpfin.2017.03.011
document_store_str 0
active_str 0
description The view that the independent directors of large banks should contribute to safeguarding the interests of bank creditors and taxpayers, by exercising a stringent risk oversight of bank executives, has gained ground in the aftermath of the 2007-2009 crisis. Using a cross-country sample of large banks for the period 2004-2014, we show that post 2009 an increase in board independence leads to more prudent bank risk-taking compared to the rest of the sample period. This effect materializes via independent boards favoring increases in bank capitalization and decreases in bank portfolio risk after the global crisis. Additional analyses demonstrate, however, that these results do not hold for all large banks in our sample but are confined to the group of banks benefiting from a government bailout during the crisis. In most large international banks board independence does not contribute to safeguarding the interests of bank creditors and taxpayers by constraining bank risk-taking.
published_date 2017-06-30T03:48:22Z
_version_ 1763752334684323840
score 11.012678

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