Delis, Manthos D and Gaganis, Chrysovalantis and Pasiouras, Fotios (2009): Bank liquidity and the board of directors.
Download (126kB) | Preview
This short paper presents the first attempt to examine empirically the relationship between the level of bank liquidity and the structure of the board of directors, in terms of board size and independence. A novel database on these board characteristics is built that includes banks operating in 10 OECD countries during the period 2000-2006. We find a negative relationship between board size and liquidity, while the impact of board independence is U-shaped. Therefore, we contend that considerations linked to these effects can have interesting implications for the design of bank conduct and for the quality of bank portfolios.
|Item Type:||MPRA Paper|
|Original Title:||Bank liquidity and the board of directors|
|Keywords:||Banks; Board size and independence; Liquidity risk|
|Subjects:||G - Financial Economics > G3 - Corporate Finance and Governance > G32 - Financing Policy ; Financial Risk and Risk Management ; Capital and Ownership Structure ; Value of Firms ; Goodwill
G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages
|Depositing User:||Manthos Delis|
|Date Deposited:||28. Nov 2009 07:18|
|Last Modified:||01. May 2015 17:44|
Agoraki, M-E. K., Delis, M.D., Pasiouras, F., 2009. Regulations, competition and bank risk-taking in transition countries. Journal of Financial Stability, doi:10.1016/j.jfs.2009.08.002 (in press).
Alexander K., 2006. Corporate governance and banks: The role of regulation in reducing the principal-agent problem. Journal of Banking Regulation 7, 17-40.
Andres P., Vallelado E., 2008. Corporate governance in banking: The role of the board of directors. Journal of Banking and Finance 32, 2570-2580.
Barth, J.R, Caprio, G., Levine, R., 2001. The regulation and supervision of bank around the world: a new database. In: Litan, R.E., Herring, R. (Eds.), Integrating Emerging Market Countries into the Global Financial System, Brookings-Wharton Papers in Financial Services, Brooking Institution Press: Washington.
Barth, J.R., Caprio, G., Levine, R., 2004. Bank regulation and supervision: what works best? Journal of Financial Intermediation 13, 205-248.
Barth, J., Caprio, G., Levine, R., 2006. Rethinking Bank Regulation: Till Angels Govern. Cambridge University Press: New York.
Barth, J.R., Caprio, G., Levine, R., 2008. Bank Regulations Are Changing: For better or Worse? Policy Research Working Paper 4646, June, World Bank.
Barth, J.R., Dopico, L.G., Nolle, D.E., Wilcox, J.A., 2002. Bank Safety and Soundness and the Structure of Bank Supervision: A Cross-Country Analysis. International Review of Finance 3, 163-188.
Barth, J.R, Nolle, D.E, Phumiwasana, T., Yago, G., 2003. A Cross-Country Analysis of the Bank Supervisory Framework and Bank Performance. Financial Markets, Institutions and Instruments 12, 67-120.
Basel Committee on Banking Supervision, 2008. Principles for Sound Liquidity Risk Management and Supervision, Bank for International Settlements, September.
Berger, A.N., Bouwman, C.H.S., 2009. Bank liquidity creation. Review of Financial Studies 22, 3779-3837.
Berger, A.N., Clarke, G.R.G., Cull, R., Klapper, L., Udell, G.F., 2005. Corporate governance and bank performance: A joint analysis of the static, selection, and dynamic effects of domestic, foreign, and state ownership. Journal of Banking and Finance 29, 2179-2221.
Bhagat S., Black B.S., 1999. The uncertain relationship between board composition and firm performance. Business Lawyer 54, 921-963.
Blundell, R. W., Bond, S.R., 1998. Initial conditions and moment restrictions in dynamic panel data models. Journal of Econometrics 87, 115-143.
Bond, S., 2002. Dynamic panel data models. A guide to micro data methods and practice. CeMMAP Working Paper, No 09/02.
Choi S., Hasan I., 2005. Ownership, governance, and bank performance: Korean Experience. Financial Markets, Institutions & Instruments 14, 215- 241.
Coles J.L., Daniel N.D., Naveen L., 2008. Boards: Does one size fit all? Journal of Financial Economics 87, 329-356.
Delis, M.D., Staikouras, P., 2009. On-site audits, sanctions, and bank risk-taking: An empirical overture towards a novel regulatory and supervisory philosophy. MPRA Paper 16836, University Library of Munich, Germany.
Dittmar A., Mahrt-Smith J., 2007. Corporate governance and the value of cash holdings. Journal of Financial Economics 83, 599-634.
Donaldson L., 1990. The ethereal hand: Organizational economics and management theory. Academy of Management Review 15, 369-381.
Donaldson L., Davis J.H., 1991. Stewardship theory or agency theory: CEO governance and shareholder returns. Australian Journal of Management 16, 49-64.
Fama E., 1980. Agency problems and the theory of the firm. Journal of Political Economy 88, 288-307.
Fama E., Jensen M., 1983. Separation of ownership and control. Journal of Law and Economics 26, 301-325.
Fernandez, A.I., Gonzalez, F., 2005. How accounting and auditing systems can counteract risk-shifting of safety nets in banking: Some international evidence. Journal of Financial Stability 1, 466-500.
Francis, B., Hasan, I., Koetter, M., Wu, Q., 2009. Do corporate board impact financial contracting? Evidence from bank loans. Mimeo.
Haubrich, J.G., Santos, J.AC., 2005. Banking and commerce: A liquidity approach. Journal of Banking & Finance, 29, 271–29.
Huther J., 1997. An empirical test of the effect of board size on firm efficiency. Economics Letters 54, 259-264.
Laeven, L., Levine, R., 2009. Bank governance, regulation and risk taking. Journal of Financial Economics 93, 259-275.
Linck, J., Netter, J., Yang, T., 2008. The determinants of board structure. Journal of Financial Economics 87, 308-328.
Pasiouras, F., Tanna, S., Zopounidis, C., 2009. The impact of banking regulations on banks' cost and profit efficiency: Cross-country evidence. International Review of Financial Analysis 18, 294-302.
Repullo, R., 2004. Capital requirements, market power, and risk-taking in banking. Journal of Financial Intermediation 13, 156-182.
Santos, J.A.C., 2001. Bank Capital Regulation in Contemporary Banking Theory: A Review of the Literature. Financial Markets, Institutions and Instruments 10 (2), 41-84.
VanHoose, D., 2007. Theories of bank behaviour under capital regulation. Journal of Banking and Finance 31, 3680-3697.
Von Thadden, E., 2004. Bank capital adequacy regulation under the new Basel Accord. Journal of Financial Intermediation 13, 90-95.
Wagner, W., 2007. The liquidity of bank assets and banking stability. Journal of Banking and Finance 31, 121-139.
Yermack D., 1996. Higher market valuation of companies with a small board of directors. Journal of Financial Economics 40, 185-211.
Yun H., 2009. The choice of corporate liquidity and corporate governance. Review of Financial Studies 22, 1447-1475.