DIVERSITY MEASURES AND QUALITY OF BANKS’ BOARDS: THE ITALIAN CASE

Abstract

Most of the studies in corporate governance in banks and other types of firms investigate board diversity and quality separately, without considering the possible relationship between these two. To fill this gap, this study investigates through a new methodological approach the level of quality and diversity of the boards of a sample of Italian banks using a proprietary hand-collected database; in addition, it examines the relationship between diversity and quality of boards to verify whether more diversity consistently relates to higher quality, in accordance with the regulatory approach. Evidence shows that especially small and mutual banks need to improve quality and diversity, as they probably suffer from their limited attractiveness to top profile directors. Moreover, on analyzing interrelations we find evidence of a positive association between board diversity and quality. In particular, financial skills and experience of directors improve the qualitative level of banking boards.