Financial and Bank-Specific Expertise

Francesco de Zwart
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Francesco de Zwart: University of Adelaide

Chapter Chapter 33 in The Key Code and Advanced Handbook for the Governance and Supervision of Banks in Australia, 2022, pp 931-944 from Springer

Abstract: Abstract Chapter 33 examines financial and bank-specific expertise. We find that lack of financial expertise is predictive of bank failure and identify inadequate risk management and internal controls. We construct governance variables in the negative direction for a deficiency in knowledge of risk management processes, measurement and methodology and a deficiency in banking expertise before identifying banking-industry-specific knowledge, skills/competencies and professional qualities. There requires a mix of financial and non-financial industry knowledge for effective challenge and we examine how to determine the balance for effective challenge, testing and debate including composition of the board and relevant expertise and the board selection process. We move to examine the financial industry expertise and independence trade-off and construct a number of governance variables for the number and time commitment of non-executive directors for audit, remuneration and risk committees. We review the non-executive director independence variables from Stage 1 and construct relational effect paths for the NED number and time commitment for the Compensation/Remuneration and Risk Committees. Chapter 33 concludes with development, training and support of non-executives and new non-executive director mentoring by senior executives and the ‘senior independent director’.

Keywords: Financial expertise; Bank-specific expertise; Bank-specific knowledge; Skills/competencies; Risk management process; Measurement and methodology; Composition of board; Expertise and Independence trade-off; Number and time commitment of NEDs; Development; Training and support of NEDs; Senior Independent Director (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-981-16-1710-2_33

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DOI: 10.1007/978-981-16-1710-2_33

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