Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5088185 | Journal of Banking & Finance | 2017 | 20 Pages |
Abstract
This paper examines the impact of internal bank governance on bank liquidity creation in the U.S. before, during and after the 2007-2009 financial crisis. Using bank holding company level data, we analyze whether better-governed banks create higher levels of liquidity. We find that this effect is positive and significant but only for large bank holding companies. Further analysis reveals that specific internal governance categories: CEO education, compensation structure, progressive practices, and ownership have a significant effect on bank liquidity. However, this positive effect occurs mostly during the crisis period, and for large banks that are also high liquidity creators. Finally, we find that the effect of governance on liquidity creation increases during the crisis period. These findings are robust even while controlling for liquidity measures, bank size, and endogeneity problems between governance and liquidity creation.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Violeta DÃaz, Ying Huang,