Examining the impact on risk when directors are related to minority shareholders in closely-held banks

Thierno Barry (1) , Laetitia Lepetit (1) , Frank Strobel (2) , Thu Tran (1)

1 LAPE - Laboratoire d'Analyse et de Prospective Economique
2 University of Birmingham [Birmingham]

Using a panel of European banks with a controlling shareholder over the period 2003-2017, we examine whether the presence of directors related to minority shareholders on the board has an impact on bank risk. We find that the inclusion of minority shareholder related directors results in lower risk. Our results depend crucially on whether or not such directors have financial expertise and a decisive position on the board, while the observed decrease in risk does not depend on their political connections. To identify the relationship, we use a dynamic generalized method of moments approach to estimation.

Mots clés: Bank governance; bank risk; minority shareholder related directors; financial expertise

Domaines: Economies et finances

Thierno Barry, Laetitia Lepetit, Frank Strobel, Thu Tran. Examining the impact on risk when directors are related to minority shareholders in closely-held banks. 2020. ⟨hal-02512450⟩