Implications for Bank Risk when Directors are Related to Minority Shareholders

Thierno Amadou Barry, Laetitia Lepetit (), Frank Strobel and Thu Ha Tran
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Thierno Amadou Barry: Université de Limoges, LAPE
Laetitia Lepetit: Université de Limoges, LAPE
Thu Ha Tran: Université Bourgogne Franche-Comté

Journal of Financial Services Research, 2022, vol. 62, issue 3, No 4, 233-265

Abstract: Abstract We examine whether directors on a board who are related to minority shareholders have an effect on bank risk. We use a panel of European banks with a controlling shareholder over the period from 2003 to 2017 and find that these directors result in lower risk. Our results depend crucially on whether or not such directors have reputational concerns or financial expertise, and the level of shareholder protection; the observed decrease in risk does not depend on their position on the board or on the presence of controlling shareholders. To identify the relationship, we use a dynamic generalized method of moments.

Keywords: Bank governance; Bank risk; Minority shareholder related directors; Financial expertise (search for similar items in EconPapers)
JEL-codes: G21 G28 G32 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s10693-021-00371-y

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