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

José María Díez-Esteban, Jorge Bento Farinha, Conrado Diego García-Gómez and Cesario Mateus ()
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José María Díez-Esteban: Pza. Infanta Elena
Jorge Bento Farinha: University of Porto
Conrado Diego García-Gómez: University of Valladolid—Soria Campus
Cesario Mateus: Aalborg University

Journal of Banking Regulation, 2022, vol. 23, issue 2, No 4, 155-172

Abstract: Abstract 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.

Keywords: Banks; Board composition; Ownership structure; Systemic risk (search for similar items in EconPapers)
JEL-codes: G21 G3 G32 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:pal:jbkreg:v:23:y:2022:i:2:d:10.1057_s41261-021-00148-2

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DOI: 10.1057/s41261-021-00148-2

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