DOES CORPORATE GOVERNANCE SUPPORT EFFICIENCY IN BANKING BUSINESS? EVIDENCE FROM EUROPEAN SYSTEMIC BANKS

The paper addresses bank governance and efficiency in an integrated manner, providing new findings and insight for future policy. The analysis gravitates around a representative set of financial institutions, comprising of all the Global Systemically Important Financial Institutions currently monitored by the European Banking Association. The empirical study had been developed on several complementary stages. Firstly, we applied a non-parametric approach to compute the technical efficiency which indirectly measures banks’ managerial efficiency in conducting the banking business. Secondly, we performed a panel data regression to uncover whether banks’ managerial efficiency is determined by boards of directors characteristics in terms of size, independence and gender diversity. Thirdly, we employed a panel data regression with fixed effects to assess if managerial efficiency and board’s features have an impact on several bank-level and banking system-level financial indicators. The findings show that managerial efficiency and banking indicators are determined by boards’ characteristics.