Much Ado about Risk Governance: An Examination of U.S. Bank Holding Companies’ Risk Management and Oversight Practices after Dodd-Frank
Abstract
The 2010 Dodd-Frank Act requires large bank holding companies (BHCs) to implement strong risk governance structures. Utilizing a difference-in-differences design that exploits BHCs’ staggered adoption of the new rules, this study examines whether the mandates have affected bank risk. I find no evidence of a relation between board-level risk committees and bank risk. I then construct a summative measure of risk governance quality, the Risk Governance Index, that incorporates board-level risk oversight and functional risk management activities.
Results using this measure are weakly suggestive that the Dodd-Frank risk oversight and risk management requirements have been moderately effective at reducing bank risk.
Subject
bank holding companiesbank governance
bank regulation
risk management
risk committees
risk governance
financial crisis
Dodd-Frank
Citation
Milbach, Lauren Nicole (2019). Much Ado about Risk Governance: An Examination of U.S. Bank Holding Companies’ Risk Management and Oversight Practices after Dodd-Frank. Doctoral dissertation, Texas A&M University. Available electronically from https : / /hdl .handle .net /1969 .1 /187939.