Abstract

http://ssrn.com/abstract=1942896
 
 

Citations (12)



 


 



Risk Management, Corporate Governance, and Bank Performance in the Financial Crisis


Markus M. Schmid


University of St. Gallen - Swiss Institute of Banking and Finance; University of St. Gallen - SoF: School of Finance

Gabriele Sabato


Group Risk Management, RBS; University of Rome

Vincent Aebi


University of St. Gallen

October 11, 2011


Abstract:     
The recent financial crisis has raised several questions with respect to the corporate governance of financial institutions. This paper investigates whether risk management-related corporate governance mechanisms, such as for example the presence of a chief risk officer (CRO) in a bank’s executive board and whether the CRO reports to the CEO or directly to the board of directors, are associated with a better bank performance during the financial crisis of 2007/2008. We measure bank performance by buy-and-hold returns and ROE and we control for standard corporate governance variables such as CEO ownership, board size, and board independence. Most importantly, our results indicate that banks, in which the CRO directly reports to the board of directors and not to the CEO (or other corporate entities), exhibit significantly higher (i.e., less negative) stock returns and ROE during the crisis. In contrast, standard corporate governance variables are mostly insignificantly or even negatively related to the banks’ performance during the crisis.

Number of Pages in PDF File: 45

Keywords: Chief risk officer, Corporate governance, Risk governance, Bank performance, Financial Crisis

JEL Classification: G01, G21, G32, G34

working papers series


Download This Paper

Date posted: October 13, 2011  

Suggested Citation

Schmid, Markus M. and Sabato, Gabriele and Aebi, Vincent, Risk Management, Corporate Governance, and Bank Performance in the Financial Crisis (October 11, 2011). Available at SSRN: http://ssrn.com/abstract=1942896 or http://dx.doi.org/10.2139/ssrn.1942896

Contact Information

Markus M. Schmid (Contact Author)
University of Saint Gallen - Swiss Institute of Banking and Finance ( email )
Rosenbergstrasse 52
St. Gallen, 9000
Switzerland
University of Saint Gallen - SoF: School of Finance ( email )
Rosenbergstrasse 52
St.Gallen, CH-9000
Switzerland

Gabriele Sabato
Group Risk Management, RBS ( email )
280 Bishopsgate
London, EC2M 4RB
United Kingdom
+447902992330 (Phone)
University of Rome ( email )
via del Castro Laurenziano, 9
Rome, 00161
Italy
+31651399907 (Phone)
HOME PAGE: http://www.gabrielesabato.it
Vincent Aebi
University of Saint Gallen ( email )
University of St. Gallen
Swiss Institute of Banking and Finance
St. Gallen, SG 9000
Switzerland
Feedback to SSRN


Paper statistics
Abstract Views: 3,705
Downloads: 1,000
Download Rank: 11,193
Citations:  12

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo6 in 0.313 seconds