Munich Personal RePEc Archive

The effect of board size and composition on bank efficiency

Agoraki, Maria-Eleni and Delis, Manthos D and Staikouras, Panagiotis (2009): The effect of board size and composition on bank efficiency.

[img]
Preview
PDF
MPRA_paper_18548.pdf

Download (212Kb) | Preview

Abstract

This paper analyzes the relationship between board structure, in terms of board size and composition, and bank performance. Unlike previous studies, the present analysis is carried out within a stochastic frontier framework. To this end, bank performance is proxied by both cost and profit efficiency, measures that present considerable advantages over simple accounting ratios. The empirical framework formed is applied to a panel of large European banks operating during the period 2002-2006. We find that board size negatively affects banks’ cost and profit efficiency, while the impact of board composition on profit efficiency is non-linear. Finally, introducing risk-taking (credit risk) as an interaction component of board size and composition does not affect the robustness of the results.

UB_LMU-Logo
MPRA is a RePEc service hosted by
the Munich University Library in Germany.