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Executive Board Composition and Bank Risk Taking

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  • Allen N. Berger

    (University of South Carolina)

  • Thomas Kick

    (Deutsche Bundesbank)

  • Klaus Schaeck

    ()
    (Bangor Business School)

Abstract

Little is known about how socioeconomic characteristics of executive teams affect corporate governance in banking. Exploiting a unique dataset, we show how age, gender, and education composition of executive teams affect risk taking of financial institutions. First, we establish that age, gender, and education jointly affect the variability of bank performance. Second, we use difference-in-difference estimations that focus exclusively on mandatory executive retirements and find that younger executive teams increase risk taking, as do board changes that result in a higher proportion of female executives. In contrast, if board changes increase the representation of executives holding Ph.D. degrees, risk taking declines.

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Bibliographic Info

Paper provided by Bangor Business School, Prifysgol Bangor University (Cymru / Wales) in its series Working Papers with number 12004.

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Date of creation: Feb 2012
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Handle: RePEc:bng:wpaper:12004

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Keywords: Banks; executives; risk taking; age; gender; education;

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  1. Polina Savchenko & Maria Semenova, 2013. "Sitting on the fence: does having a ‘dual-director’ add to bank profitability?," HSE Working papers WP BRP 16/FE/2013, National Research University Higher School of Economics.
  2. Nataliya Barasinska & Dorothea Schäfer, 2013. "Is the Willingness to Take Financial Risk a Sex-Linked Trait?: Evidence from National Surveys of Household Finance," Discussion Papers of DIW Berlin 1278, DIW Berlin, German Institute for Economic Research.
  3. Khrystyna Kushnir & Mohammad Amin, 2013. "Gender Based Differences in Managerial Experience: The Case of Informal Firms in Rwanda," Economics Bulletin, AccessEcon, vol. 33(4), pages 3032-3049.
  4. Balsmeier, Benjamin & Bermig, Andreas & Dilger, Alexander & Geyer, Hannah, 2011. "Corporate governance and employee power in the boardroom: An applied game theoretical analysis," Discussion Papers of the Institute for Organisational Economics 9/2011, University of Münster, Institute for Organisational Economics.
  5. Berger, Allen N. & Kick, Thomas & Koetter, Michael & Schaeck, Klaus, 2011. "Does it pay to have friends? Social ties and executive appointments in banking," Discussion Paper Series 2: Banking and Financial Studies 2011,18, Deutsche Bundesbank, Research Centre.
  6. van Staveren, I.P., 2012. "The Lehman Sisters Hypothesis: an exploration of literature and bankers," ISS Working Papers - General Series 545, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
  7. Amelie Charles & Etienne Redor, 2014. "Women are from Venus, Men are from Mars: But Do the Financial Markets Know It?," Economics Bulletin, AccessEcon, vol. 34(1), pages 589-604.
  8. Jeroen Nieboer, 2013. "Risk taking in diverse groups: Gender matters," Discussion Papers 2013-06, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  9. Silvia Del Prete & Maria Lucia Stefani, 2013. "Women on Italian bank boards: are they “gold dust”?," Questioni di Economia e Finanza (Occasional Papers) 175, Bank of Italy, Economic Research and International Relations Area.
  10. Amélie Charles & Etienne Redor, 2014. "Women are from Venus, Men are from Mars: But Do the Financial Markets Know It?," Post-Print hal-00977037, HAL.

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