Abstract
Anastasia N. Stepanova - National Research University The Higher School of Economics 
 E-mail: anstepanova@hse.ru
 Ivantsova Olga Mikhailovna - expert: Faculty of Economics, Research and Training Laboratory of Corporate Finance, HSE.
 E-mail: oivantsova@hse.ru
 This paper aims to investigate the effect that internal corporate governance mechanisms have on the performance of commercial banks, how it differs for developed and emerging European markets, and whether it has changed as a result of the financial crisis. The key statistical tool used in the paper is the panel data analysis of the sample of 150 banks from 27 countries, over the period 2004-2011. We document the evidence partially supporting the effectiveness of smaller boards of directors, while the board independence seems to be negatively associated with the strategic performance of banks, especially in emerging markets and in times of a crisis. In emerging markets, state-owned banks appear to be more market-efficient, while high ownership concentration is considered by market players to be a negative signal. Studying the 2008 financial crisis period provides the evidence for structural movements in nonfinancial performance drivers.
Highlights
The financial crisis of 2008 showed how little we know about the governance of banks and how crucial the sustainability of the banking sector is
In order to do so, we study the relationship between the corporate performance of European commercial banks and their corporate governance mechanisms, such as the board of directors and ownership structure, using a sample of 150 European banks
We find that independent directors are negatively associated with the strategic performance of commercial banks
Summary
The financial crisis of 2008 showed how little we know about the governance of banks and how crucial the sustainability of the banking sector is. The corporate governance of banks has special relevance, due to the specifics of the banking sector and its particular function in the economy. A better understanding of corporate governance as a driver of bank performance is needed. The Basel Committee on Banking Supervision called for a need to study and improve the corporate governance of financial institutions. The Basel Committee emphasized the importance of the senior management structure and the board of directors [Enhancing Corporate Governance for Banking Organizations, 1999, 2006]. According to the Basel Committee, good corporate governance is necessary to guarantee a sound financial system. With respect to their size and composition, has been one of the main issues in corporate governance initiatives undertaken by international authorities over the past decade [EU Commission Communication, 2005; Basel Committee, 2006]
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