Bank Board Network and Financial Stability in Emerging Markets

46 Pages Posted: 23 Jan 2021

See all articles by Shreya Biswas

Shreya Biswas

BITS Pilani, Hyderabad Campus

Dr. Rajnish Kumar

Indira Gandhi Institute of Development Research (IGIDR)

Date Written: October 16, 2020

Abstract

This study analyzes the relation between board network and financial stability of banks in India. We find that a larger board network is related to improvements in financial stability given by asset quality, insolvency risk, and volatility of profits. Further, the board network is more critical for the private sector banks in India. Our findings support the integrated resource dependence view of the board where well-connected boards are better able to monitor the management and provide strategic advice necessary to reduce risk. Unlike for non-financial firms, restricting the number of directorial positions for bank directors may not have any desirable effect on bank outcomes.

Suggested Citation

Biswas, Shreya and Kumar, Rajnish, Bank Board Network and Financial Stability in Emerging Markets (October 16, 2020). Available at SSRN: https://ssrn.com/abstract=3712825 or http://dx.doi.org/10.2139/ssrn.3712825

Shreya Biswas (Contact Author)

BITS Pilani, Hyderabad Campus ( email )

Block C234, BITS-Pilani, Hyderabad Campus
Jawahar Nagar, Shameerpet Mandal
Hyderabad, Telangana 500078
India

Rajnish Kumar

Indira Gandhi Institute of Development Research (IGIDR) ( email )

Gen A.K. Vaidya Marg Santoshnagar
Goregaon (East)
Mumbai, Maharashtra 400065
India

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