Risk committee complexity and liquidity risk in the European banking industry

Enzo Scannella, Nicolas Eber, Abel François, Laurent Weill

Risultato della ricerca: Articlepeer review

Abstract

The present study aims to investigate how bank governance characteristics are related to liquidity risk by analysing board composition, gender, and the risk committee. A dynamic panel data model is employed on a sample of European banks during the period after the financial crisis (from 2011 to 2017). Furthermore, we collect information about the profiles of the directors on the boards of banks, thereby creating five categories of risk committee members. To address the endogeneity issue, a generalised method of moments two-step estimator is implemented. The findings highlight that the fundamental role of the risk committee adequately shields banks against general liquidity risks. Moreover, the results show a reduction in liquidity risk when a certain threshold of risk supervisors is defined, aiming to reduce risk-taking behaviours. We provide evidence that the effectiveness of the risk committee is strictly related to its complexity. The results of the present study sup- port the corporate governance principles for banks established by the Basel Committee on Banking Supervision, thus reinforcing the board’s risk governance responsibilities, espe- cially with regard to the specific roles of the risk committee.
Lingua originaleEnglish
pagine (da-a)691-703
Numero di pagine13
RivistaJOURNAL OF ECONOMIC BEHAVIOR & ORGANIZATION
Volume192
Stato di pubblicazionePublished - 2021

All Science Journal Classification (ASJC) codes

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  • ???subjectarea.asjc.1400.1407???

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