Does diversity of bank board members affect performance and risk? Evidence from an emerging market

Abstract : This study investigates the influence of background diversity of bank board members on performance and risk. Using data from Indonesian banks from 2001 to 2011 covering 4200 individual year observations and 21 ethnic groups, we estimate the degree of diversity by considering various aspects (gender, citizenship, age, experience, tenure, ethnicity, nationality, education level and type) and find significant impacts on bank performance. On the whole, diversity is in general positively associated with performance except when it relates to ethnicity. It not only reduces performance per se but also increases risk. Female presence and professional diversity reduce risk but nationality and ethnicity diversities are associated with higher risk. Education diversity generally leads to higher income volatility and leverage risk. Our results are generally robust to various alternative performance measures, including risk adjusted returns, and estimation methods.
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https://hal-unilim.archives-ouvertes.fr/hal-01070988
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Soumis le : jeudi 2 octobre 2014 - 18:45:58
Dernière modification le : mercredi 28 février 2018 - 17:06:02
Document(s) archivé(s) le : samedi 3 janvier 2015 - 11:25:41

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Bowo Setiyono, Amine Tarazi. Does diversity of bank board members affect performance and risk? Evidence from an emerging market. 2014. ⟨hal-01070988⟩

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