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2018 | OriginalPaper | Chapter

9. Does Diversity of Bank Board Members Affect Performance and Risk? Evidence from an Emerging Market

Authors : Bowo Setiyono, Amine Tarazi

Published in: Corporate Governance in Banking and Investor Protection

Publisher: Springer International Publishing

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Abstract

This study investigates the influence of background diversity of bank board members on performance and risk. Using data from Indonesian banks from 2001 to 2011 covering 4200 individual year observations and 21 ethnic groups, we estimate the degree of diversity by considering various aspects (gender, citizenship, age, experience, tenure, ethnicity, nationality, education level and type) and find significant impacts on bank performance. On the whole, diversity is in general positively associated with performance except when it relates to ethnicity. It not only reduces performance per se but also increases risk. Female presence and professional diversity reduce risk but nationality and ethnicity diversities are associated with higher risk. Education diversity generally leads to higher income volatility and leverage risk. Our results are generally robust to various alternative performance measures, including risk adjusted returns, and estimation methods.

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Appendix
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Metadata
Title
Does Diversity of Bank Board Members Affect Performance and Risk? Evidence from an Emerging Market
Authors
Bowo Setiyono
Amine Tarazi
Copyright Year
2018
DOI
https://doi.org/10.1007/978-3-319-70007-6_9

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