 Corporate Governance and Banking Systemic Risk: A Test of the Bundling HypothesisKwabena Aboah Addo, Nazim Hussain and Jamshed Iqbal Journal of International Money and Finance, 2021, vol. 115, issue C Abstract: We provide new evidence that the systemic risk of large banks is higher when external and internal corporate governance mechanisms complement each other. Using a sample of large European banks from 2000 to 2016, we examine the relationship between various internal and external corporate governance mechanisms and the level of systemic risk. Specifically, we analyze how monitoring by institutional investors complements or substitutes various board-level governance mechanisms in determining the systemic risk of a bank. Our empirical findings show that external (institutional ownership) and internal (board level) governance mechanisms complement each other to determine the level of systemic risk of a sample of domestic systemically important banks. Our results are robust to alternative systemic risk measures and additional controls. We conclude that banks have strategic flexibility in terms of configuring their corporate governance structures to attain similar levels of systemic risk. Keywords: Board of directors; Systemic risk; Absorption ratio; Domestic Systemically Important Banks (D-SIBs); Governance bundles (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:115:y:2021:i:c:s0261560620302837 DOI: 10.1016/j.jimonfin.2020.102327 Access Statistics for this article Journal of International Money and Finance is currently edited by J. R. Lothian More articles in Journal of International Money and Finance from Elsevier |
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