The Impact of Governance Mechanism of CEOs in Taiwanese Banks on Bank Herding Behavior in Lending

• Main Authors: Wang-Su Liao, 廖婉夙
• Other Authors: Hao Fang
• Format: Others
• Language: zh-TW
• Published: 2015
• Online Access: http://ndltd.ncl.edu.tw/handle/44997609871575042318

碩士 === 華夏科技大學 === 資產與物業管理研究所 === 103 === Currently, very few studies have analyzed the impact of corporate governance of banks on their lending behavior directly from the bank operators’ perspective. However, except for some studies that have indicated that poor corporate governance may deteriorate lending performance, banks should tend to generate herding behavior in lending so as to avoid continuous deterioration of non-performing loans. Furthermore, in managing bank herding behavior in lending, bank CEOs ought to play a key role. In this dissertation, the main objects of analysis are exchange-listed banks in Taiwan. First, this study extends the LSV measure used by Uchida and Nakagawa (2007) to examine whether all banks and various types of banks in Taiwan have total and irrational herding behavior in industrial lending. Once the banks’ lending performance is confirmed to negatively affect their lending herding behavior, this study extend the model design of the impact of corporate governance on lending performance proposed by Peni et al. (2012) to explore for how various types of banks’ governance, including bank’s incentives (holding and compensation),turnover and characteristics (dual, educational attainment, political links and gender), impact herding behavior in lending in Taiwan. The empirical results show that all the listed banks in Taiwan have a significant herding behavior in lending in each year. Secondly, this study found that bank herding behavior in lending had a negative correlation with bank lending performance. The adjustment value also showed the same result. According to bank governance (incentives, turnover and trait) level, this study found that bank CEOs with higher pay, lower turnover rates, non-dual identity and higher levels of education will significantly reduce the bank herding behavior in lending. Moreover, excluding rational factors analysis showed only a slight difference with the above situation, but the bank CEOs’ political links became a positive significant effect, as well. The positive results of this study can provide favorable regulatory references on bank lending policies to the financial and banking supervision units, as well as internal regulatory authorities.