Bank board network and financial stability in emerging markets |
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| Affiliation: | 1. Assistant Professor, Department of Economics and Finance, Birla Institute of Technology and Science, Pilani, Hyderabad Campus, India;1. International Business School, Zhejiang Gongshang University, No.18 Xuezheng Street, Xiasha, Hangzhou 310018, China;2. School of Accounting, Zhongnan University of Economics and Law, 182# Nanhu Avenue, East Lake High-tech Development Zone, Wuhan 430073, China;1. Department of Accounting, China Women''s University, No.1 Yuhui East Road, Chaoyang District, Beijing, 100101, China;2. Department of Finance, The University of Alabama, 200 Alston Hall, Tuscaloosa, AL 35487, United States of America;1. School of Public Administration, Southwest Jiaotong University, Chengdu, China;2. School of Finance, Shandong University of Finance and Economics, Jinan, China;3. Solbridge International School of Business, Daejeon, South Korea;1. Center for Economic Development Research, Wuhan University, Wuhan 430072, China;2. Institute of Economics, Wuhan University, Wuhan 430072, China |
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| Abstract: | This study finds that the board network is related to improvements in the financial stability of banks given by asset quality, insolvency risk and volatility of profits. Further, the board network is more critical for the private sector banks in India. The board network also improves the performance of banks, providing evidence in favor of the integrated resource dependence view of the board. Well-connected boards increase information availability and reduce the information asymmetry between the bank and its borrower. For financial firms, restricting the number of directorial positions for bank directors may not have any desirable effect on bank outcomes. |
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