XXV Edition

1-2 December 2016"

Diversity and Competence in Banks’ Boards. The Italian Case

Locatelli Rossella, University of Insubria
Schena Cristiana Schena, University of Insubria
Uselli Andrea, University of Insubria
Tanda Alessandra, University of Milan

This study investigates quality and diversity of the individual board members and of the board as a whole in Italian banks. In particular, we focus on the key profiles to assess the level of board diversity, as well as the relationship between quality and diversity taking reference to regulatory prescriptions. To our best knowledge, this study is among the first to study jointly directors’ qualitative characteristics and board composition in banks. In particular it is devoted to appreciate both quality and board heterogeneity and to analyze the relation between them in a regulatory compliance approach. Results show a positive relationship between different measures of diversity and quality levels of bank’s board. Diversity seems to increase as the size of banks increases; boards of directors of mutual banks appear the least diversified and also the ones with the lowest quality score. We point out the relevance of financial skills and experience in defining boards’ qualitative profile. The study provides original and new results, useful not only for the academic discussion, but also for more practical objectives. The main results of the study, in fact, call for an improvement in the composition of banks’ boards of directors in the light of the forthcoming regulatory measures as well as for a strengthening in main profiles here individuated, which result to be relevant also for financial Regulators to appreciate board diversity and directors’ skills.

Area: Corporate Governance (Nedcommunity Award)

Keywords: Corporate Governance, Board Composition, Diversity, Bank Regulation

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