The Demographic Characteristics of the Boards of Directors and Effects on Bank Robustness

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Abstract

The demographic characteristics of the directors have previously been considered in the literature with reference to different aspects of corporate life, such as firms’ performance, market price volatility and, generally, their risk appetite. The mandatory introduction of a minimum level of leverage ratio within the banking system with Basel III opens up a new field of investigation that is addressed for the first time by our research. Using a database of 13 significant Italian banks, we found that the robustness of the banking system is positively related to the percentage of directors on the board holding degrees in economics, their age and the board size. We highlight the finding that the percentage of holders of degrees in law has no impact on banks’ leverage ratios. The obtained results confirm and sustain that the board composition of banks is very important for achieving a more robust banking system.
Original languageEnglish
Pages (from-to)53-63
Number of pages11
JournalINTERNATIONAL JOURNAL OF BUSINESS AND SOCIAL SCIENCE
Publication statusPublished - 2018

Keywords

  • bank robustness
  • bank's leverage ratio
  • board diversity
  • corporate governance

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