Strong boards, CEO power and bank risk-taking

Date of this Version


Document Type

Journal Article

Publication Details

Published version.

Pathan, S. (2009) Strong boards, CEO power and bank risk-taking, Journal of Banking and Finance, 33(7), 1340-1350 forthcoming.

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2009 HERDC submission. FoR code 1502

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This study examines the relevance of bank board structure on bank risk-taking. Using a sample of 212 large US bank holding companies over 1997-2004 (1,534 observations), this study finds that strong bank boards (boards reflecting more of bank shareholders interest) particularly small and less restrictive boards positively affect bank risk-taking. In contrast, CEO power (CEO's ability to control board decision) negatively affects bank risk-taking. These results are consistent with the bank contracting environment and robust to several proxies for bank risk-takings and different estimation techniques.


This document has been peer reviewed.