Corporate Governance and Diversity in Chinese Banks

The world economy experienced a deep recession in the wake of the global financial crisis in 2008. Early warnings of a crisis began in the United States after the credit boom in mid-2007 and the meltdown of subprime mortgages and securitized products (Ivashina and Scharfstein, 2010).The crisis hit the vast majority of developed economies by the contagion effect. Consequently, a large number of financial institutions collapsed or were bailed out by governments during the global financial crisis, for example, RBS and HBOS in the United Kingdom, and Dexia, Fortis, Hypo Real Estate, and UBS in continental Europe (Erkens et al., 2012).Therefore, major concerns about bank governance were raised—in particular, board composition and directors’ characteristics, board independence, and risk management, and improving these was seen as a means of improving financial performance (Jose et al., 2011).