Corporate Governance and Risk Management of Bank: Evidence from China

This paper examines the impact of bank governance on risk management by using the statistics method. Some studies address the question of how bank governance practices affect risk management. However, empirical research to this issue has received less attention in emerging markets, especially during financial crisis. Our dataset includes a sample for all listed commercial banks in China from year 2007 to 2009. The results suggest that bank governance is relevant to risk management. Specifically, the shareholding of the largest shareholder affects bank risk management but its effect is non-linear, but little evidence in executive compensation and other factors of corporate governance. The banks may actually benefit from the good bank governance, which can improve the risk management, especially during financial crisis.