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Corporate governance of banks: A survey

Author

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  • Jakob de Haan
  • Razvan Vlahu

Abstract

This paper reviews the empirical literature on the corporate governance of banks. We start by highlighting the main differences between banks and non-financial firms and focus on three characteristics which make banks special: (i) regulation, (ii) the capital structure of banks, and (iii) the complexity and opacity of their business and structure. Next, we discuss the characteristics of corporate governance in banks and how they differ from the governance of non-financial firms. We then review the evidence on three governance mechanisms: (i) boards, (ii) ownership structures, and (iii) executive compensation. Our review suggests that some of the empirical regularities found in the literature on corporate governance of nonfinancial institutions, such as the positive (negative) association between board independence (size) and performance, do not hold for banks. Also, existing work provides less than conclusive results regarding the relation between different governance mechanisms and various measures for banks' performance. We discuss potential explanations for these mixed results.

Suggested Citation

  • Jakob de Haan & Razvan Vlahu, 2013. "Corporate governance of banks: A survey," DNB Working Papers 386, Netherlands Central Bank, Research Department.
  • Handle: RePEc:dnb:dnbwpp:386
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    Cited by:

    1. repec:pal:jbkreg:v:19:y:2018:i:3:d:10.1057_s41261-017-0045-0 is not listed on IDEAS
    2. Kick, Thomas & Nehring, Inge & Schertler, Andrea, 2017. "Do all new brooms sweep clean? Evidence for outside bank appointments," Journal of Banking & Finance, Elsevier, vol. 84(C), pages 135-151.
    3. Andries, Alin Marius & Brown, Martin, 2014. "Credit Booms and Busts in Emerging Markets: The Role of Bank Governance and Risk Managment," Working Papers on Finance 1414, University of St. Gallen, School of Finance.
    4. repec:gam:jijfss:v:6:y:2018:i:1:p:17-:d:129836 is not listed on IDEAS
    5. Linus Siming, 2018. "Government Involvement in the Corporate Governance of Banks," Post-Print hal-01861817, HAL.
    6. repec:kap:jbuset:v:148:y:2018:i:3:d:10.1007_s10551-015-2949-x is not listed on IDEAS
    7. Éric Vernier & Régis Dumoulin & Hodonou Dannon, 2017. "Diversité du conseil d'administration et politique de dividende des grands groupes bancaires systémiques : théories et investigations empiriques," Post-Print hal-01856607, HAL.
    8. Stulz, Rene M., 2016. "Risk management, governance, culture, and risk taking in banks," Economic Policy Review, Federal Reserve Bank of New York, issue Aug, pages 43-60.
    9. repec:kap:rqfnac:v:49:y:2017:i:1:d:10.1007_s11156-016-0582-0 is not listed on IDEAS
    10. repec:eee:riibaf:v:42:y:2017:i:c:p:1005-1010 is not listed on IDEAS
    11. repec:eee:finana:v:55:y:2018:i:c:p:60-79 is not listed on IDEAS
    12. Talavera, Oleksandr & Yin, Shuxing & Zhang, Mao, 2016. "Managing the diversity: board age diversity, directors’ personal values, and bank performance," MPRA Paper 71927, University Library of Munich, Germany.
    13. Macey, Jonathan R. & O'Hara, Maureen, 2016. "Bank corporate governance: a proposal for the post-crisis world," Economic Policy Review, Federal Reserve Bank of New York, issue Aug, pages 85-105.
    14. René M. Stulz, 2015. "Risk-Taking and Risk Management by Banks," Journal of Applied Corporate Finance, Morgan Stanley, vol. 27(1), pages 8-18, March.
    15. David-Jan Jansen & Robert Mosch & Carin Cruijsen, 2015. "When Does the General Public Lose Trust in Banks?," Journal of Financial Services Research, Springer;Western Finance Association, vol. 48(2), pages 127-141, October.
    16. García-Kuhnert, Yamileh & Marchica, Maria-Teresa & Mura, Roberto, 2015. "Shareholder diversification and bank risk-taking," Journal of Financial Intermediation, Elsevier, vol. 24(4), pages 602-635.
    17. René M. Stulz, 2014. "Governance, Risk Management, and Risk-Taking in Banks," NBER Working Papers 20274, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    banking; governance; boards; bank ownership; executive remuneration;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy

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