Board Characteristics and Chinese Bank Performance

51 Pages Posted: 16 Apr 2013 Last revised: 26 Apr 2013

See all articles by Qi Liang

Qi Liang

Nankai University

Pisun (Tracy) Xu

University of Denver - Reiman School of Finance

Pornsit Jiraporn

Pennsylvania State University - School of Graduate Professional Studies (SGPS)

Date Written: April 22, 2013

Abstract

Using a sample of 50 largest Chinese banks during the period of 2003-2010, we explore a comprehensive set of board characteristics (size, composition and functioning of the board) and analyze their impacts on bank performance and bank asset quality in China. We find that the number of board meetings and the proportion of independent directors have significantly positive impacts on both bank performance and asset quality while bank size has a significantly negative impact on bank performance. We find new evidence that the degree of bank boards’ political connection is negatively correlated with bank performance and asset quality. The findings suggest that the board of directors plays a significant role in bank governance in China.

Keywords: Bank performance, Bank reform, Board of Directors, Corporate governance, Chinese banking

JEL Classification: G21, G28, G32, G34

Suggested Citation

Liang, Qi and Xu, Pisun (Tracy) and Jiraporn, Pornsit, Board Characteristics and Chinese Bank Performance (April 22, 2013). Available at SSRN: https://ssrn.com/abstract=2251496 or http://dx.doi.org/10.2139/ssrn.2251496

Qi Liang

Nankai University ( email )

94 Weijin Road
Tianjin, 300071
China

Pisun (Tracy) Xu (Contact Author)

University of Denver - Reiman School of Finance

Denver, CO 80208-8951
United States

Pornsit Jiraporn

Pennsylvania State University - School of Graduate Professional Studies (SGPS) ( email )

30 E. Swedesford Road
Malvern, PA 19355
United States
(484) 753-3655 (Phone)

HOME PAGE: http://www.personal.psu.edu/pxj11/index1.html

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