Corporate governance of banks and financial stability
Anginer,D. Demirguc-Kunt,Asli Huizinga,Harry Ma,Kebin
Anginer,D.
Demirguc-Kunt,Asli
Huizinga,Harry
Ma,Kebin
Abstract
We find that shareholder-friendly corporate governance is associated with higher stand-alone and systemic risk in the banking sector. Specifically, shareholder-friendly corporate governance results in higher risk for larger banks and for banks that are located in countries with generous financial safety nets as banks try to shift risk toward taxpayers. We confirm our findings by comparing banks to nonfinancial firms and examining changes in bank risk around an exogenous regulatory change in governance. Our results underline the importance of the financial safety net and too-big-to-fail guarantees in thinking about corporate governance reforms at banks.
Description
Date
2018-11
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Volume Title
Publisher
Research Projects
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Keywords
coporate governance, bank insolvency, systemic risk, G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages, M21 - Business Economics, SDG 10 - Reduced Inequalities
Citation
Anginer, D, Demirguc-Kunt, A, Huizinga, H & Ma, K 2018, 'Corporate governance of banks and financial stability', Journal of Financial Economics, vol. 130, no. 2, pp. 327-346. https://doi.org/10.1016/j.jfineco.2018.06.011