Implications for bank risk when directors are related to minority shareholders

Thierno Amadou Barry, Laetitia Lepetit, Frank Strobel, Thu Ha Tran

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We examine whether directors on a board who are related to minority shareholders have an effect on bank risk. We use a panel of European banks with a controlling shareholder over the period from 2003 to 2017 and find that these directors result in lower risk. Our results depend crucially on whether or not such directors have reputational concerns or financial expertise, and the level of shareholder protection; the observed decrease in risk does not depend on their position on the board or on the presence of controlling shareholders. To identify the relationship, we use a dynamic generalized method of moments.

Original languageEnglish
Pages (from-to)233-265
Number of pages33
JournalJournal of Financial Services Research
Issue number3
Early online date21 Jan 2022
Publication statusPublished - 1 Dec 2022

Bibliographical note

Funding Information:
This work was supported by the AAP Région Nouvelle Aquitaine (2018-1R40110) “Optimal bank board structure: Finding the right fit for all stakeholders”, coordinated by the Université de Limoges. Further competing interests: none.

Publisher Copyright:
© 2021, The Author(s), under exclusive licence to Springer Science+Business Media, LLC, part of Springer Nature.


  • Bank governance
  • Bank risk
  • Financial expertise
  • Minority shareholder related directors

ASJC Scopus subject areas

  • Economics and Econometrics
  • Accounting
  • Finance


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