NManagement Board Composition of Banking Institutions and Bank Risk-Taking: The Case of the Czech Republic

Diana Zigraiova

No 2016/02, Working Papers IES from Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies

Abstract: The paper investigates how management board composition of banking institutions impacts their risk-taking behavior in the Czech Republic. More specifically, we examine the effect of average director age, proportion of female directors, non-national directors and proportion of their attained education on four different bank risk proxies. We build a unique data set comprising selected biographical information on management board members of the Czech financial institutions holding a banking license over 2001-2012 period. For the Czech banking sector overall, we find that higher proportions of non-national directors increase bank risk measured by profit volatility and decrease bank stability captured by Z-score. Similarly, a larger proportion of directors holding an MBA raises bank riskiness measured by profit volatility. On the other hand, the presence of directors holding a PhD on boards of large Czech banks enhances bank stability captured by Z-score. Moreover, we detect risk-enhancing implications of board size for the segments of building savings societies and small and midsized banks. As for average board tenure, its effect on risk-taking varies depending on bank characteristics. We find mixed evidence on the effect of female directors and do not find any strong effect of directors' age on risk in the Czech banking sector.

Keywords: Management board composition; banks; risk-taking; panel data (search for similar items in EconPapers)
JEL-codes: C33 G21 G34 J16 (search for similar items in EconPapers)
Pages: 46pages
Date: 2016-01, Revised 2016-01
New Economics Papers: this item is included in nep-ban, nep-cfn and nep-hrm
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://ies.fsv.cuni.cz/sci/publication/show/id/5432/lang/cs (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://ies.fsv.cuni.cz/sci/publication/show/id/5432/lang/cs [301 Moved Permanently]--> https://ies.fsv.cuni.cz/sci/publication/show/id/5432/lang/cs)

Related works:
Working Paper: Management Board Composition of Banking Institutions and Bank Risk-Taking: The Case of the Czech Republic (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fau:wpaper:wp2016_02

Access Statistics for this paper

More papers in Working Papers IES from Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies Contact information at EDIRC.
Bibliographic data for series maintained by Natalie Svarcova ().