Macroprudential policies, corporate governance and bank risk: cross-country evidence

Chrysovalantis Gaganis, Ana Lozano-Vivas, Panagiota Papadimitri, Fotios Pasiouras

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Abstract

The present study uses a sample of up to 356 banks from 50 countries over the period 2002–2017 to examine whether and how macroprudential policies and corporate governance interact in shaping bank risk. Our results show that the impact of bank corporate governance on risk-taking depends critically on the macroprudential policies in force. In more detail, bank corporate governance has a negative or insignificant impact on bank stability when none or only a few macroprudential policies are in place; however, the impact becomes positive and statistically significant as the number of macroprudential policies increases. These findings seem to be attributed to financial institutions targeted macroprudential instruments rather than borrowing targeted ones. The results are robust to the use of various indicators of risk and numerous additional tests.
Original languageEnglish
Article number0
Pages (from-to)126-142
Number of pages17
JournalJournal of Economic Behavior & Organization
Volume169
Early online date21 Nov 2019
DOIs
Publication statusPublished - 1 Jan 2020

Keywords

  • Banks
  • Governance
  • Macroprudential
  • Regulations
  • Risk

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