Politically connected boards, ownership structure and credit risk: evidence from Chinese commercial banks

Agyenim Boateng, Yang Liu*, Sanjukta Brahma

*Corresponding author for this work

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    Abstract

    This study explores whether the nature of ownership may condition the extent and impact of political connections on credit risk decisions. We find politically connected boards to exert significant influence on credit risk. Further evidence shows that ownership type of the bank moderates the link between politically connected boards and credit risk. Specifically, state owned banks appear to be more susceptible to credit risk while independent directors in private banks tend to be effective monitors. Our findings have important implications for bank stability and provide a means to measure the success of corporate governance reforms carried out in emerging countries over the past two decades.
    Original languageEnglish
    Pages (from-to)162-173
    Number of pages12
    JournalResearch in International Business and Finance
    Volume47
    Early online date22 Jul 2018
    DOIs
    Publication statusPublished - Jan 2019

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    Keywords

    • Chinese commercial banks
    • finance
    • credit risk

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