This paper aims to analyze the effectiveness of the board monitoring$\backslash$nrole on specific loan portfolio quality measures in banks (default$\backslash$nrate, recovery rate and provisioning rate). We use a sample comprises$\backslash$na totality of Italian-based banks, listed at Borsa Italiana SpA in$\backslash$n2006-2008 and a number of accounting proxies to express the loan$\backslash$nportfolio quality of a bank. The results of the analysis show an$\backslash$noverall weakness of the board role (expressed by Independents and$\backslash$nAudit Committee on board) in monitoring loan portfolio quality of$\backslash$nthe bank, with the subsequent damage of the interests of stakeholders.$\backslash$nA positive contribution of board monitoring, even if partial, is$\backslash$nhighlighted in two cases: Independents seems improve recovery rate,$\backslash$nwhile the Audit committee enhances provisioning rate in banks. With$\backslash$nreference to default rate, a total negative effect of board monitoring$\backslash$nis reported. On the base of implications are proposed. these results,$\backslash$nsome managerial

An Empirical Analysis on Board Monitoring Role and Loan Portfolio Quality in Banks

STEFANELLI, Valeria;
2012

Abstract

This paper aims to analyze the effectiveness of the board monitoring$\backslash$nrole on specific loan portfolio quality measures in banks (default$\backslash$nrate, recovery rate and provisioning rate). We use a sample comprises$\backslash$na totality of Italian-based banks, listed at Borsa Italiana SpA in$\backslash$n2006-2008 and a number of accounting proxies to express the loan$\backslash$nportfolio quality of a bank. The results of the analysis show an$\backslash$noverall weakness of the board role (expressed by Independents and$\backslash$nAudit Committee on board) in monitoring loan portfolio quality of$\backslash$nthe bank, with the subsequent damage of the interests of stakeholders.$\backslash$nA positive contribution of board monitoring, even if partial, is$\backslash$nhighlighted in two cases: Independents seems improve recovery rate,$\backslash$nwhile the Audit committee enhances provisioning rate in banks. With$\backslash$nreference to default rate, a total negative effect of board monitoring$\backslash$nis reported. On the base of implications are proposed. these results,$\backslash$nsome managerial
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11587/390381
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