This paper examines the effects of board composition and monitoring on the credit risk in the UK banking sector. The study finds CEO duality, pay and board independence to have a positive and significant effect on credit risk of the UK banks. However, board size and women on board have a negative and significant influence on credit risk. Further analysis using sub-samples divided into pre-financial crisis, during the financial crisis and post crisis reinforce the robustness of our findings. Overall, the paper sheds light on the effectiveness of the within-firm monitoring arrangement, particularly, the effects of CEO power and board independence on credit risk decisions thereby contributing to the agency theory.
- credit risk
- UK banking industry
- corporate governance
- board composition
Lu, J., & Boateng, A. (2018). Board composition, monitoring and credit risk: evidence from the UK banking industry. Review of Quantitative Finance and Accounting , 51, 1107-1128. https://doi.org/10.1007/s11156-017-0698-x