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Impacts of Ownership Balance and Nonexecutive Directors on Bank Performance and Risk Taking: Evidence from City Commercial Banks in China

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  • Fangzhao Zhou
  • Yajing Fu
  • Yunbi An
  • Jun Yang

Abstract

This paper investigates the impacts of nongovernmental stake, ownership balance, and nonexecutive directors on bank performance and risk taking in city commercial banks (CCBs) in China. We find that ownership balance can improve CCBs’ financial performance and reduce their bankruptcy risk as well as nonperforming loan level. Nonexecutive directors can help reduce bankruptcy risk, but have no significant effect on performance or nonperforming loans. The impacts of ownership balance and nonexecutive directors become more prominent when the nongovernmental stake is relatively high, suggesting that mixed ownership reform can promote bank performance and risk control via these two avenues.

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  • Fangzhao Zhou & Yajing Fu & Yunbi An & Jun Yang, 2019. "Impacts of Ownership Balance and Nonexecutive Directors on Bank Performance and Risk Taking: Evidence from City Commercial Banks in China," Global Economic Review, Taylor & Francis Journals, vol. 48(1), pages 1-24, January.
    • Handle: RePEc:taf:glecrv:v:48:y:2019:i:1:p:1-24
    DOI: 10.1080/1226508X.2018.1528170
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