Board composition, monitoring and credit risk: evidence from the UK banking industry

Jia Lu; Agyenim Boateng

doi:10.1007/s11156-017-0698-x

Board composition, monitoring and credit risk: evidence from the UK banking industry

Jia Lu, Agyenim Boateng^*

^*Corresponding author for this work

Research output: Contribution to journal › Article › peer-review

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Abstract

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.

Original language	English
Pages (from-to)	1107-1128
Number of pages	22
Journal	Review of Quantitative Finance and Accounting
Volume	51
Early online date	28 Dec 2017
DOIs	https://doi.org/10.1007/s11156-017-0698-x
Publication status	Published - Nov 2018

Keywords

credit risk
UK banking industry
corporate governance
board composition
monitoring
banks

Documents and Links

10.1007/s11156-017-0698-x

Lu, J. & Boateng, A. (2017) Board composition, monitoring and credit risk: evidence from the UK banking industry
This is a post-peer-review, pre-copyedit version of an article published in Review of Quantitative Finance and Accounting. The final authenticated version is available online at: http://dx.doi.org/10.1007/s11156-017-0698-x
Accepted author manuscript, 758 KB

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title = "Board composition, monitoring and credit risk: evidence from the UK banking industry",

abstract = "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.",

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note = "Acceptance in SAN Requested AAM 16-1-18 and 19-7-18 Author has now left GCU ^AAM found via other repository 16/12/19 ET; query to Liverpool Hope U for deposit and access dates. ET 16/12/19 http://hira.hope.ac.uk/id/eprint/2638/ ^^Sent further request to HIRA on 11/5/20. ET Not possible to obtain AAM, applied no exception result. ET 2/6/20 ",

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