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 journalArticle

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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 languageEnglish
    Pages (from-to)1107-1128
    Number of pages22
    JournalReview of Quantitative Finance and Accounting
    Volume51
    Early online date28 Dec 2017
    DOIs
    Publication statusPublished - Nov 2018

    Keywords

    • credit risk
    • UK banking industry
    • corporate governance
    • board composition
    • monitoring
    • banks

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