The effect of board size and composition on bank efficiency

Maria-Eleni Agoraki, Manthos Delis () and Panagiotis Staikouras

MPRA Paper from University Library of Munich, Germany

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.

Keywords: Corporate governance; Board size and composition; Bank cost and profit efficiency; Stochastic frontier analysis (search for similar items in EconPapers)
JEL-codes: C23 G21 G34 K23 (search for similar items in EconPapers)
Date: 2009-10-08
New Economics Papers: this item is included in nep-ban and nep-eff
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: The effect of board size and composition on bank efficiency (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:18548

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