Corporate Governance and Bank Insolvency Risk : International Evidence

Anginer, Deniz ; Demirguc-Kunt, Asli ; Huizinga, Harry ; Ma, Kebin

World Bank Group, Washington, DC

关键词: ACCOUNTING;    ADVERSE EFFECTS;    ASSET GROWTH;    ASSET VALUE;    ASSET VALUES;   

DOI  :  10.1596/1813-9450-7017
RP-ID  :  WPS7017

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

This paper finds thatshareholder-friendly corporate governance is positivelyassociated with bank insolvency risk, as proxied by theZ-score and the Merton's distance to default measure,for an international sample of banks over the 2004-08period. Banks are special in that "good" corporategovernance increases bank insolvency risk relatively morefor banks that are large and located in countries with soundpublic finances, as banks aim to exploit the financialsafety net. Good corporate governance is specificallyassociated with higher asset volatility, more nonperformingloans, and a lower tangible capital ratio. Furthermore, goodcorporate governance is associated with more bankrisk-taking at times of rapid economic expansion. Consistentwith increased risk-taking, good corporate governance isassociated with a higher valuation of the implicit insuranceprovided by the financial safety net, especially in the caseof large banks. These results underline the importance ofthe financial safety net and too-big-to-fail policies inencouraging excessive risk-taking by banks.