Abstract Using the data of 109 Chinese commercial banks from 2013 to 2017, this paper quantitatively analyzes the levels of potential credit risk of banks, investigates the gap compared to the information issued by banks, to know how prudentially the banks operate, and empirically research the impact of corporate governance factors and the tenure of the board chairman on the prudence of bank. We find that the relationship between the size of board and the prudent level of bank is “U effect”, and the tenure of the board chairman has a significant impact on the prudent level of the bank. The results show that, because of the conflicting of multiple interests, and the “free riders” in boards, banks will hide credit risk and loss rather than arise the non-performing loan, so that the problem loans cannot be handled promptly. This paper provides new ideas for enhancing corporate governance of Chinese banks, and improving the risk management system of banks.
2020, Vol. 37 
