Bank Governance and Bank Capital

36 Pages Posted: 14 Aug 2014

See all articles by Karen Kai Lin Lai

Karen Kai Lin Lai

Hitotsubashi University - Graduate School of Commerce and Management

Masaru Konishi

Hitotsubashi University - Graduate School of Commerce and Management

Date Written: August 14, 2014

Abstract

This study examines the impact of bank ownership and bank governance on capital. Using Japanese commercial banks as a sample over a Basel II period (2007-2012), we investigate the impact of bank ownership and management structure on the level of bank capital. Our results suggest that institutional and foreign ownership tends toward a higher level of capital for the sake of risk-taking. In contrast though, inside directors are more concerned with their undiversified human capital risk, thus reluctant to increase capital for a higher level of risk-taking. Additionally, board size, independent directors, and outside directors positively affect the level of capital, revealing the conservatism of these directors in maintaining higher capital levels to prepare for unexpected losses.

Keywords: G21; G28; G32

JEL Classification: capital, bank governance, bank ownership, market discipline

Suggested Citation

Lai, Karen Kai Lin and Konishi, Masaru, Bank Governance and Bank Capital (August 14, 2014). 27th Australasian Finance and Banking Conference 2014 Paper. Available at SSRN: https://ssrn.com/abstract=2480286 or http://dx.doi.org/10.2139/ssrn.2480286

Karen Kai Lin Lai

Hitotsubashi University - Graduate School of Commerce and Management ( email )

2-1 Naka Kunitachi-shi
Tokyo 186-8601
Japan
81-42-580-8469 (Phone)

Masaru Konishi (Contact Author)

Hitotsubashi University - Graduate School of Commerce and Management ( email )

2-1 Naka Kunitachi-shi
Tokyo 186-8601
Japan

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