The Impact of Corporate Governance in the Banking Sector Performance: The Case of the 2007-2008 Financial Crisis

Abstract

This research project aims to analyse the role of banks governance as an explanation to the recent financial crises. We claim to contribute to the current debate on the issue of governance mechanisms in explaining the performance of the banking sector, crucial to understanding of the 2007-2008 financial crises, in three important ways. Firstly, providing a unique and innovative analyse of the impact of board social and economic networks on bank performance, including political connections and business networks. Secondly, analysing the impact of deposit insurance on bank performance, considering both country and bank specific characteristics. Thirdly, analysing the banks’ characteristics that received government bailouts, namely in what concerns their corporate governance and try to shed more light on the extent to which banks’ governance characteristics determine the response to the financial crisis. The sample consists of 181 publicly listed banks from EMU countries, between 2002 and 2009 subject to the following criteria (1) being listed at least 1 year before year of analysis and (2) do no changed its governance structure due to mergers or acquisitions (M&A), in order to exclude banks than, eventually, around M&A have influenced stocks prices and/or manipulate results.