Bank board network and financial stability in emerging markets

This study finds that the board network is related to improvements in the financial stability of banks given by asset quality, insolvency risk and volatility of profits. Further, the board network is more critical for the private sector banks in India. The board network also improves the performance of banks, providing evidence in favor of the integrated resource dependence view of the board. Well-connected boards increase information availability and reduce the information asymmetry between the bank and its borrower. For financial firms, restricting the number of directorial positions for bank directors may not have any desirable effect on bank outcomes. •Board network improves financial stability of Indian banks given by asset quality, insolvency risk and volatility of profits.•Board network is more important for the financial stability of private banks in India.•Board network improves bank performance of Indian banks.•The flow of information in the network is the primary channel through which the board network improves financial stability.•Corporate governance of banks requires separate attention than non-financial firms.