The Relationship Between the Boards Characteristics and the Risk Management of the Romanian Banking Sector

Abstract

The main objective of this research is to analyse the relationship between the board of director’ structure of the banks from the Romanian bank sector, the capital demands and the risk management in what concerns these relationships. Regarding the structure of the board of directors, their size is under the loop, alongside with the education of its members, the gender diversity and the members nationality. The indicators concerning the capital demand that are subject of this research are the solvency and the level of the total own funds of the banks and the ones expressing the risk management are represented by the total exposure of weighted assets according to the risk (RWA), the credit risk exposure, the market risk and the operational risk. The authors have tried to answer the question: Is there or is not a direct relationship between the top of the range board of directors structure and the risk management for the banks from the Romanian bank sector? To answer this question, the used methodology is mainly quantitatively, having as core the deductive statistical analysis, testing and identifying connections from the effect and cause category, considering also the significance level.

The Interplay between Board Characteristics, Financial Performance, and Risk Management Disclosure in the Financial Services Sector: New Empirical Evidence from Europe

“…An effective risk management is achieved through an independent, highly-skilled, experienced, and dedicated governance board, further leading to an increase in the portfolios of assets as a generator of return and reduced operational costs. Additionally, (Bunea and Dinu 2020, pp. 1250-1251 highlight "a positive and significant link between the boards of directors dimensions and the solvability of the analyzed banks", as well as "a direct link of medium intensity between the level of the total own funds and the boards of directors characteristics, referring to the gender diversity, the members education and the dimension of the boards of director".…”

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