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Identifier 000438529
Title The effects of corporate governance on banks' loan and bond portfolios
Alternative Title Η επίδραση της εταιρικής διακυβέρνησης στα χαρτοφυλάκεια δανείων και ομολόγων των τραπεζών
Author Δανιηλίδης, Ιωάννης Α.
Thesis advisor Γαγάνης Χρυσοβαλάντης
Reviewer Πασιούρας Φώτιος
Ζοπουνίδης Κωνσταντίνος
Abstract Board diversity has attracted increased interest in recent years among governmental agencies, the European Commission or other stakeholders. The present thesis contributes to the debate concerning board diversity by examining the relationship between board composition and a bank’s international loan and sovereign bond portfolio. The focus is on board members’ nationality, data on which is partly hand-collected. A dataset derived from the European Union-wide stress test conducted by the European Banking Authority in 2014, 2016 and 2018 is utilized. This dataset provides information about the distribution of each bank’s loan portfolio acrosss its nine primary national markets and their respective default rates. It also provides detailed information about the distribution and duration of each bank’s sovereign bond portfolio. Finally, I examine whether and how corporate governance characteristics affect banks’ loan portfolios, both in normal times as well as during a crisis. I find that a higher proportion of foreign board members is positively associated with a higher share of a bank’s loans abroad, especially in the board member’s country of origin. However, results do not clearly show that including a board member from a specific country can ensure a better NPL ratio in that country. Also, foreign board members’ ratio is not associated with the bank’s average NPL ratio. Average age of board members and the ratio of female board members are positively associated with the bank’s successful presence abroad. The host country’s institutional setting, macroeconomic conditions and familiarity variables also influence the bank’s local NPL ratio. I also find that a higher ratio of foreign board members is associated with lower home bias in a bank’s bond portfolio. The same applies for non-eurozone board members and regional bias. The inclusion of foreign board members is also associated with a higher foreign bias in their country of origin, especially as the ratio of bond holdings in this country increases, which implies a strategic focus. I deal with endogeneity using a lagged value approach. Foreign board members’ ratio and bond portfolio risk are not found to be associated with each other. I also document the role of ownership in home bias, in particular regarding the held-to-maturity portfolio. Finally, I find a negative association between CEO duality and loan growth across most loan categories and during normal times. The ratio of independent and non-executive board members is associated with growth only in specific loan categories. However, the effect of corporate governance values on loan growth is limited, compared with financial ratios. The ratio of independent directors has a different impact on loan growth of smaller and larger banks, and also affects write-off ratios.Overall, the present thesis contributes to the literature in three major ways: 1. It develops a novel database to examine corporate governance arrangements for the most important banks in Europe. Given that most of them are not listed in any stock exchange, available information about them is limited and these are thus left out of most samples. However, these banks (e.g. German Landesbanken, Spanish cajas, Italian and Dutch cooperatives and French specialized banks) lie at the heart of the European banking system. 2. It extends our knowledge concerning the inclusion of foreign board members. Furthermore, it examines whether and in what way this affects banks’ loan and bond portfolios. 3. It extends our understanding of the last crisis by examining how the most important loan categories’ figures in Greece evolved.
Language English
Subject Bank loans
Corporate governance
European banks
Greek banks
Nationality of board members
Εθνικότητα μελών Δ.Σ.
Ελληνικές τράπεζες
Εταιρικής διακυβέρνησης
Ευρωπαϊκές τράπεζες
Τραπεζικά δάνεια
Issue date 2020
Collection   School/Department--School of Social Sciences--Department of Economics--Doctoral theses
  Type of Work--Doctoral theses
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