Does board composition and ownership structure affect banks' systemic risk? European evidence

• Type: Article in International Scientific Journal
• Date: 2022-06

Authors

Jorge Farinha (Author) FEP; Diez-Esteban, J. (Author) Other; Garcia-Gómez, J. (Author) Other; Mateus, C. (Author) Other

Journal

Title: Journal of Banking Regulation

Vol. 23 No. 2

Pages: 155-172

ISSN: 1745-6452

Publisher: Springer Nature

Indexing

ISI Web of Knowledge - 13 Citations

Scopus - 13 Citations

Other information

Authenticus ID: P-00T-RR9

DOI: 10.1057/s41261-021-00148-2

Abstract (EN): In this paper, we expand the scarce literature regarding the effects of ownership structure and board composition on market measures of banks' systemic risk. Based on a sample of 87 European banks over the period 2010-2016, we provide evidence that ownership concentration has a non-monotonic (inverted u-shape) relationship with systemic risk. Additionally, we find that board characteristics (board size and gender) affect a bank's systemic risk, but for small banks only. Overall, our evidence suggests that the traditional banks' size-focused approach to systemic risk study should be complemented with governance dimensions, especially in a context like the European one, where ownership concentration is high. Our results also imply that practitioners and policymakers should promote better governance practices in banks in the form of more adequate ownership and board structures that are better able to control systemic risk.

Language: English

Type (Professor's evaluation): Scientific

No. of pages: 18