Is the Journey more Important than the Destination? EU Accession and Corporate Governance and Performance of Banks

Mehmet Maksud Onal,John K Ashton

doi:10.1111/jcms.13198

Abstract

AbstractThis article examines how accession to and subsequent membership of the EU has influenced the dissemination of corporate governance characteristics and the financial performance of the banking industry. Using a hand‐collected, cross‐national dataset from EU member and candidate states the analysis indicates the candidacy period is associated with the better financial performance of banks than the latter period of EU membership. EU membership also has a significant negative influence on adopting some corporate governance arrangements. We infer this result is consistent with instrumental rationality explanations of Europeanization. While the process of accession has brought benefits, these are not always reinforced by subsequent EU membership.

Highlights

While it has been long assumed that EU membership improves the political, economic, institutional, social and educational standards of member states, these benefits have been increasingly questioned (Rosamond, 2020)
We report that the accession process influences the corporate governance practices of banks in candidate states more than that in EU member states
Banks are considered from four long-established EU member states (France, Germany, Greece and Spain), recent new members of the EU who have been through an accession process and candidate states still within the accession process

Summary

Introduction

While it has been long assumed that EU membership improves the political, economic, institutional, social and educational standards of member states, these benefits have been increasingly questioned (Rosamond, 2020). To contribute to this wider discourse we examine how a critical industry; namely, banking, has been affected by this political process of joining or accession to the EU. We empirically examined these research questions using a hand-collected data set of 211 sample banks over the period 2000–15 These data are drawn from 11 EU member states, five candidate states and a control sample of banks from four long-standing EU member states. We observe more adherence to, and economic benefit arising from EU regulatory demands during the accession process relative to actual EU membership

Methods

Results

Conclusion