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Implications for Bank Risk when Directors are Related to Minority Shareholders

Author

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  • Thierno Amadou Barry

    (UNILIM - Université de Limoges, LAPE - Laboratoire d'Analyse et de Prospective Economique - GIO - Gouvernance des Institutions et des Organisations - UNILIM - Université de Limoges)

  • Laetitia Lepetit

    (UNILIM - Université de Limoges, LAPE - Laboratoire d'Analyse et de Prospective Economique - GIO - Gouvernance des Institutions et des Organisations - UNILIM - Université de Limoges)

  • Frank Strobel
  • Thu Ha Tran

Abstract

We examine whether directors on a board who are related to minority shareholders have an effect on bank risk. We use a panel of European banks with a controlling shareholder over the period from 2003 to 2017 and find that these directors result in lower risk. Our results depend crucially on whether or not such directors have reputational concerns or financial expertise, and the level of shareholder protection; the observed decrease in risk does not depend on their position on the board or on the presence of controlling shareholders. To identify the relationship, we use a dynamic generalized method of moments.

Suggested Citation

  • Thierno Amadou Barry & Laetitia Lepetit & Frank Strobel & Thu Ha Tran, 2022. "Implications for Bank Risk when Directors are Related to Minority Shareholders," Post-Print hal-04681693, HAL.
  • Handle: RePEc:hal:journl:hal-04681693
    DOI: 10.1007/s10693-021-00371-y
    as

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