ECIN Replication Package for "Bondholder representatives on bank boards: a device for market discipline"
Principal Investigator(s): View help for Principal Investigator(s) Isabelle Distinguin, Université de Limoges; Laetitia Lepetit, Université de Limoges; Frank Strobel, University of Birmingham; Phan Huy Hieu Tran, Burgundy School of Business
Version: View help for Version V1
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Project Citation:
Project Description
Abstract
We examine whether board representation of bondholders can be an effective market discipline mechanism to reduce bank risk, using a unique dataset combining information on bondholders and boards of directors of European listed banks. Our results show that the influence of bondholder representatives on the bank board significantly reduces bank risk without impacting profitability. The beneficial effect of this market discipline mechanism is stronger when bondholder representatives have regulatory experience, current or long relationships with their affiliated bondholders, and for more complex banks. In contrast, the reducing impact on bank risk is smaller for banks with lower capitalization levels.
Scope of Project
G21 Banks; Depository Institutions; Micro Finance Institutions; Mortgages
G28 Financial Institutions and Services: Government Policy and Regulation
Related Publications
Published Versions
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