How does CEO power and overconfidence affect the systemic risk of China’s financial institutions?
The purpose of this paper is two-fold. First, this study measures the contribution of banks and non-bank financial institutions toward the systemic risk of China. Second, the present study investigates the relationship between CEO power, CEO overconfidence, and systemic risk. This study uses the Del...
| Main Authors: | , , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
Frontiers Media S.A.
2022-09-01
|
| Series: | Frontiers in Psychology |
| Subjects: | |
| Online Access: | https://www.frontiersin.org/articles/10.3389/fpsyg.2022.847988/full |
| _version_ | 1811265079781359616 |
|---|---|
| author | Yingying Chen Adnan Safi Yasir Zeb Yasir Zeb |
| author_facet | Yingying Chen Adnan Safi Yasir Zeb Yasir Zeb |
| author_sort | Yingying Chen |
| collection | DOAJ |
| description | The purpose of this paper is two-fold. First, this study measures the contribution of banks and non-bank financial institutions toward the systemic risk of China. Second, the present study investigates the relationship between CEO power, CEO overconfidence, and systemic risk. This study uses the Delta Conditional Value-at-Risk (∆CoVaR) method to measure the systemic risk contribution of firms listed on the Shenzhen and Shanghai stock exchanges over a period of 2006–2018. The results show that non-bank financial institutions are systemically more important compared to banks. We employed fixed-effect regression analysis to show that banks with overconfident CEOs increase the firm’s systemic risk. The results also confirm that powerful CEOs enhance the contribution of non-bank financial institutions to systemic risk, whereas CEO power’s impact was significant only for non-state-owned banks. The findings were further validated by the robustness test results obtained using the two-stage least squares approach. These findings are important for constructing regulations to reduce the contribution of firms to systemic risk. |
| first_indexed | 2024-04-12T20:17:11Z |
| format | Article |
| id | doaj.art-65bc91a2a9a045248ae01068e6aad460 |
| institution | Directory Open Access Journal |
| issn | 1664-1078 |
| language | English |
| last_indexed | 2024-04-12T20:17:11Z |
| publishDate | 2022-09-01 |
| publisher | Frontiers Media S.A. |
| record_format | Article |
| series | Frontiers in Psychology |
| spelling | doaj.art-65bc91a2a9a045248ae01068e6aad4602022-12-22T03:18:06ZengFrontiers Media S.A.Frontiers in Psychology1664-10782022-09-011310.3389/fpsyg.2022.847988847988How does CEO power and overconfidence affect the systemic risk of China’s financial institutions?Yingying Chen0Adnan Safi1Yasir Zeb2Yasir Zeb3School of Economics, Qingdao University, Qingdao, Shandong, ChinaSchool of Economics, Qingdao University, Qingdao, Shandong, ChinaDepartment of Management Sciences, Virtual University of Pakistan, Lahore, PakistanSchool of Business, Qingdao University, Qingdao, Shandong, ChinaThe purpose of this paper is two-fold. First, this study measures the contribution of banks and non-bank financial institutions toward the systemic risk of China. Second, the present study investigates the relationship between CEO power, CEO overconfidence, and systemic risk. This study uses the Delta Conditional Value-at-Risk (∆CoVaR) method to measure the systemic risk contribution of firms listed on the Shenzhen and Shanghai stock exchanges over a period of 2006–2018. The results show that non-bank financial institutions are systemically more important compared to banks. We employed fixed-effect regression analysis to show that banks with overconfident CEOs increase the firm’s systemic risk. The results also confirm that powerful CEOs enhance the contribution of non-bank financial institutions to systemic risk, whereas CEO power’s impact was significant only for non-state-owned banks. The findings were further validated by the robustness test results obtained using the two-stage least squares approach. These findings are important for constructing regulations to reduce the contribution of firms to systemic risk.https://www.frontiersin.org/articles/10.3389/fpsyg.2022.847988/fullsystemic risk∆CoVaRCEO poweroverconfidencefinancial institutionsstate-owned enterprises |
| spellingShingle | Yingying Chen Adnan Safi Yasir Zeb Yasir Zeb How does CEO power and overconfidence affect the systemic risk of China’s financial institutions? Frontiers in Psychology systemic risk ∆CoVaR CEO power overconfidence financial institutions state-owned enterprises |
| title | How does CEO power and overconfidence affect the systemic risk of China’s financial institutions? |
| title_full | How does CEO power and overconfidence affect the systemic risk of China’s financial institutions? |
| title_fullStr | How does CEO power and overconfidence affect the systemic risk of China’s financial institutions? |
| title_full_unstemmed | How does CEO power and overconfidence affect the systemic risk of China’s financial institutions? |
| title_short | How does CEO power and overconfidence affect the systemic risk of China’s financial institutions? |
| title_sort | how does ceo power and overconfidence affect the systemic risk of china s financial institutions |
| topic | systemic risk ∆CoVaR CEO power overconfidence financial institutions state-owned enterprises |
| url | https://www.frontiersin.org/articles/10.3389/fpsyg.2022.847988/full |
| work_keys_str_mv | AT yingyingchen howdoesceopowerandoverconfidenceaffectthesystemicriskofchinasfinancialinstitutions AT adnansafi howdoesceopowerandoverconfidenceaffectthesystemicriskofchinasfinancialinstitutions AT yasirzeb howdoesceopowerandoverconfidenceaffectthesystemicriskofchinasfinancialinstitutions AT yasirzeb howdoesceopowerandoverconfidenceaffectthesystemicriskofchinasfinancialinstitutions |