Board Members’ Educational Background and Financial Performance: Evidence from Eurozone Banks

Vítor Manuel Morais Pereira () and José António Candeias Bonito Filipe ()
Additional contact information
Vítor Manuel Morais Pereira: CEFAGE-ISCAL, ISCAL – Instituto Superior de Contabilidade e Administração de Lisboa, Instituto Politécnico de Lisboa, Portugal
José António Candeias Bonito Filipe: BRU-IUL – Business Research Unit, ISTAR-IUL – Information Sciences and Technologies and Architecture Research Center, Instituto Universitário de Lisboa (ISCTE-IUL), Portugal

Journal of Central Banking Theory and Practice, 2022, vol. 11, issue 3, 203-227

Abstract: This study examines the impact of the quality of board members’ educational background on the financial performance of a group of Eurozone banks. Return on average assets (ROAA), Return on average equity (ROAE), and Tobin’s Q are used as measures to assess bank financial performance. Three indices are used as proxies for board members’ educational qualifications: Eduindex, for all academic qualifications in areas such as business or economics; Eduversal, for all qualifications from business schools ranked by Eduniversal; and EduFT, for all qualifications from business schools ranked by the Financial Times. Our study results offer relevant policy implications. Generally, there is a significant negative effect from Eduversal and EduFT qualifications on bank financial performance. This effect can be explained by the fact that some well-qualified board members use their expertise for their own interest, which, in most cases, is not favourable for bank financial performance. The implication is that the European Central Bank needs to implement more rigorous measures than those currently imposed to control bank board member behaviour and reduce agency problems.

Keywords: Bank financial performance; corporate governance; board of directors; educational background; Eurozone banking. (search for similar items in EconPapers)
JEL-codes: C10 G20 (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.cbcg.me/repec/cbk/journl/vol11no3-10.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cbk:journl:v:11:y:2022:i:3:p:203-227

Access Statistics for this article

More articles in Journal of Central Banking Theory and Practice from Central bank of Montenegro Contact information at EDIRC.
Bibliographic data for series maintained by ().