Corporate Governance and Bank Insolvency Risk: International Evidence
By D. Anginer, Asli Demirgüç-Kunt, Harry Huizinga, K. Ma. 2014
237 citations recorded by the source corpus.
This paper finds that shareholder-friendly corporate governance is positively associated with bank insolvency risk, as proxied by the Z-score and the Merton’s distance to default measure, for an international sample of banks over the 2004-2008 period. Banks are special in that ‘good’ corporate governance increases bank insolvency risk relatively more for banks that are large and located in countries with sound public finances, as banks aim to exploit the financial safety net. ‘Good’ corporate governance is specifically associated with higher asset volatility, more non-performing loans, and a lower tangible capital ratio. Furthermore, ‘good’ corporate governance is associated with more bank risk taking at times of rapid economic expansion. Consistent with increased risk-taking, ‘good’ corporate governance is associated with a higher valuation of the implicit insurance provided by the financial safety net, especially in the case of large banks. These results underline the importance of the financial safety net and too-big-to-fail policies in encouraging excessive risk-taking by banks.
Subfields: Accounting, Finance
View Paper: https://www.semanticscholar.org/paper/0c8f353ce3e9cca87c78c392c8bdfd116e1d7a89
How researchers see this paper
The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.
In Accounting
- Sanjai Bhagat
- Brian J. Bolton
- Abul Shamsuddin
- Muhammad Safiullah
- Luc Laeven
- Hui Tong
- Giovanni Dell'Ariccia
- Lev Ratnovski
In Finance
- Luc Laeven
- Hui Tong
- Giovanni Dell'Ariccia
- Sanjai Bhagat
- Brian J. Bolton
- Abul Shamsuddin
- Muhammad Safiullah
- Lev Ratnovski
Citations in the corpus
- Benefits and Costs of Bank Capital (2016, methodology): “Figure 2 shows peak NPL ratios during crises: panel A for crises in countries in the Organization for Economic Co-operation and Development (OECD) only, panel B for all banking crises since 1970, both based on data from Laeven and Valencia (2013).7 Second, we convert NPLs into loan losses.”
- Corporate governance and firm performance: The sequel (2019, background): “(2018), Anginer et al. (2018), and Bernile et al. (2018). 3 Stock ownership within most boards is highly skewed. While the median ownership in our sample is about $1.7 million, the average ownership is over $30 million, usually driven by one large owner. 4 The sample of 100 largest U.S. financial in”
- Thoughts on Financial Accounting and the Banking Industry (2014, unknown): “5 For example, Anginer et al. (2014) find for an”
- Risk in Islamic banking and corporate governance (2018, result): “The latter outcome is in line with the findings of previous studies on board governance-risk nexus in conventional banks (Anginer et al., 2014; Pathan, 2009).”