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Do bank boards focus adequately on risk?

Agarwal, Samanvaya, Kamath, Saipriya, Subramanian, Krishnamurthy and Tantri, Prasanna (2015) Do bank boards focus adequately on risk? . Indian School of Business, Hyderabad, India.

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Abstract

Prior academic research on bank risk-taking has mostly concentrated on the role of board structure. However, board conduct and its relationship to risk-taking by banks has not received much attention. In this paper, we fill this gap by analyzing the minutes of board and risk management committee (RMC) meetings of 29 banks. We manually classify the issues into different categories, and code whether each issue has been deliberated at length. Among the issues tabled, risk accounts for only 11% while regulation and compliance account for the most (37%) followed by business strategy (35%). Only 20% of the issues are deliberated at length. The RMC meets infrequently and deliberates only 28% of the issues. Only 25% of the issues tabled in the RMC are forward-looking in nature. We interpret this evidence to imply that bank boards focus inadequately on risk and adopt a “box ticking” approach instead of focusing in spirit on risk oversight.

Item Type: Monograph (Working Paper)
Official URL: https://www.nseindia.com/
Additional Information: © 2015 The Authors
Divisions: Accounting
Subjects: H Social Sciences > HF Commerce > HF5601 Accounting
JEL classification: G - Financial Economics > G3 - Corporate Finance and Governance > G30 - General
L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L20 - General
Date Deposited: 11 Oct 2019 23:26
Last Modified: 20 Nov 2019 05:12
URI: http://eprints.lse.ac.uk/id/eprint/102070

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