This paper aims to analyze the effectiveness of the board monitoring$backslash$nrole on specific loan portfolio quality measures in banks (default$backslash$nrate, recovery rate and provisioning rate). We use a sample comprises$backslash$na totality of Italian-based banks, listed at Borsa Italiana SpA in$backslash$n2006-2008 and a number of accounting proxies to express the loan$backslash$nportfolio quality of a bank. The results of the analysis show an$backslash$noverall weakness of the board role (expressed by Independents and$backslash$nAudit Committee on board) in monitoring loan portfolio quality of$backslash$nthe bank, with the subsequent damage of the interests of stakeholders.$backslash$nA positive contribution of board monitoring, even if partial, is$backslash$nhighlighted in two cases: Independents seems improve recovery rate,$backslash$nwhile the Audit committee enhances provisioning rate in banks. With$backslash$nreference to default rate, a total negative effect of board monitoring$backslash$nis reported. On the base of implications are proposed. these results,$backslash$nsome managerial

In the wake of the recent economic and financial crisis, board induction and training process has become highly important. This article discusses that an institutionalized and effective board induction and training process could maximize the director’s contribution thus improving board effectiveness in banks. Firstly, by using qualitative research methods, the study shows the state of the art measures on board induction and training programs for directors in European banks. And then, it also depicts the results of a survey about the opinions of an Italian panel on the topic. Findings confirm that directors are aware of the importance of induction and training programs as a tool to enhance the effectiveness of corporate governance. However, there is substantially limited dissemination of these practices in banks and, in those cases where these practices are used more extensively, it is possible to spot some areas of improvement compared to best practices. Our results may be justified by: a delay of regulation on governance; a possible disappointment of company executives and a consideration of these practices in terms of mere business “costs” rather than as “opportunities” to improve the bank board effectiveness. On the basis of our knowledge, there is no empirical analysis designed to describe the dissemination and the organizational characteristics of the initiatives of training and updating of directors in banks, so this article will improve the existing literature on bank governance and European boards.

The aim of this paper is to broaden the existing literature, by assessing the level of dependence in CCBs between loan default rate, on the one hand, and governance and peer monitoring, on the other, taking into account the business model of the banks and the competition dynamics in the local market.

This article empirically verifies the existence of a connection between the relationship-oriented model and the quality of the loan portfolio, by using alternative risk measures to previous studies. Consistently with earlier literature, bank size, distance and intensity of labour are used as proxies for the relationship lending model. The main results demonstrate that the relationship lending variables are all significant contributory factors to the loan portfolio quality. Robustness tests, conducted using intermediate risk measures (Doubtful Loan Rate (DLR), Past Due Loan Rate (PDLR)), confirm the results. Our findings are consistent with the relationship lending literature, but we extend to Default Rate (DR) measurement, a new role in terms of a banking model to create loans and manage credit risk. Finally, banking literature can take advantage of the DR indicator as a proxy for the quality of loan portfolio, and we consider its strong relationship to the intermediation model chosen.