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<p>Using quarterly data spanning 2011–2022, this study investigates how staggered CEO turnovers in Indian private sector banks causally affect provisioning and risk-taking. Exploiting exogenous variation arising from mandatory retirement rules that require CEOs to step down after either 15 years in office or upon reaching 70 years, the analysis isolates the quasi-random timing of leadership transitions. This staggered structure provides a clean difference-in-differences setting for causal inference. The results show that incoming CEOs of banks with weaker asset quality or capital buffers adopt more conservative provisioning, consistent with transparency and capital-management motives. Yet this conservatism is more pronounced and risk-enhancing among new private banks than old ones. While the findings illuminate how leadership transitions shape prudential behaviour in emerging-market settings with evolving governance, their generalisability beyond such institutional contexts warrants caution.</p>

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CEO turnover and provisioning practices in Indian private banks

  • 期刊论文

  • 发表日期：

    2026年1月27日

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  • Saibal Ghosh

摘要

Using quarterly data spanning 2011–2022, this study investigates how staggered CEO turnovers in Indian private sector banks causally affect provisioning and risk-taking. Exploiting exogenous variation arising from mandatory retirement rules that require CEOs to step down after either 15 years in office or upon reaching 70 years, the analysis isolates the quasi-random timing of leadership transitions. This staggered structure provides a clean difference-in-differences setting for causal inference. The results show that incoming CEOs of banks with weaker asset quality or capital buffers adopt more conservative provisioning, consistent with transparency and capital-management motives. Yet this conservatism is more pronounced and risk-enhancing among new private banks than old ones. While the findings illuminate how leadership transitions shape prudential behaviour in emerging-market settings with evolving governance, their generalisability beyond such institutional contexts warrants caution.