Corporate governance, opaque bank activities, and risk/return efficiency

Pre- and post-crisis evidence from Turkey

O.G. De Jonghe, M. Disli, K. Schoors

Research output: Contribution to journal › Article › Scientific › peer-review

Abstract

Does better corporate governance unambiguously improve the risk/return efficiency of banks? Or does either a re-orientation of banks’ revenue mix towards more opaque products, an economic downturn, or tighter supervision create off-setting or reinforcing effects? The authors relate bank efficiency to shortfalls from a stochastic risk/return frontier. They analyze how internal governance mechanisms (CEO duality, board experience, political connections, and education profile) and external governance mechanisms (discipline exerted by shareholders, depositors, or skilled employees) determine efficiency in a sample of Turkish banks. The 2000 financial crisis was a wake-up call for bank efficiency and corporate governance. As a result, better corporate governance mechanisms have been able to improve risk/return efficiency when the economic, regulatory, and supervisory environments are more stable and bank products are more complex.
Original languageEnglish
Pages (from-to)51-80
JournalJournal of Financial Services Research
Volume41
Issue number1-2
Publication statusPublished - 2012

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Corporate governance
Risk and return
Turkey
Risk-return
Governance mechanisms
Bank efficiency
Corporate governance mechanisms
Supervision
CEO duality
Financial crisis
Internal governance
Education
Employees
Economics
Political connections
Revenue
Economic downturn
Shareholders

Cite this

De Jonghe, O.G. ; Disli, M. ; Schoors, K. / Corporate governance, opaque bank activities, and risk/return efficiency : Pre- and post-crisis evidence from Turkey. In: Journal of Financial Services Research. 2012 ; Vol. 41, No. 1-2. pp. 51-80.
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abstract = "Does better corporate governance unambiguously improve the risk/return efficiency of banks? Or does either a re-orientation of banks’ revenue mix towards more opaque products, an economic downturn, or tighter supervision create off-setting or reinforcing effects? The authors relate bank efficiency to shortfalls from a stochastic risk/return frontier. They analyze how internal governance mechanisms (CEO duality, board experience, political connections, and education profile) and external governance mechanisms (discipline exerted by shareholders, depositors, or skilled employees) determine efficiency in a sample of Turkish banks. The 2000 financial crisis was a wake-up call for bank efficiency and corporate governance. As a result, better corporate governance mechanisms have been able to improve risk/return efficiency when the economic, regulatory, and supervisory environments are more stable and bank products are more complex.",
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De Jonghe, OG, Disli, M & Schoors, K 2012, 'Corporate governance, opaque bank activities, and risk/return efficiency: Pre- and post-crisis evidence from Turkey', Journal of Financial Services Research, vol. 41, no. 1-2, pp. 51-80.

Corporate governance, opaque bank activities, and risk/return efficiency : Pre- and post-crisis evidence from Turkey. / De Jonghe, O.G.; Disli, M.; Schoors, K.

In: Journal of Financial Services Research, Vol. 41, No. 1-2, 2012, p. 51-80.

Research output: Contribution to journal › Article › Scientific › peer-review

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AU - Schoors, K.

N1 - Appeared earlier as CentER Discussion Paper 2011-129

PY - 2012

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N2 - Does better corporate governance unambiguously improve the risk/return efficiency of banks? Or does either a re-orientation of banks’ revenue mix towards more opaque products, an economic downturn, or tighter supervision create off-setting or reinforcing effects? The authors relate bank efficiency to shortfalls from a stochastic risk/return frontier. They analyze how internal governance mechanisms (CEO duality, board experience, political connections, and education profile) and external governance mechanisms (discipline exerted by shareholders, depositors, or skilled employees) determine efficiency in a sample of Turkish banks. The 2000 financial crisis was a wake-up call for bank efficiency and corporate governance. As a result, better corporate governance mechanisms have been able to improve risk/return efficiency when the economic, regulatory, and supervisory environments are more stable and bank products are more complex.

AB - Does better corporate governance unambiguously improve the risk/return efficiency of banks? Or does either a re-orientation of banks’ revenue mix towards more opaque products, an economic downturn, or tighter supervision create off-setting or reinforcing effects? The authors relate bank efficiency to shortfalls from a stochastic risk/return frontier. They analyze how internal governance mechanisms (CEO duality, board experience, political connections, and education profile) and external governance mechanisms (discipline exerted by shareholders, depositors, or skilled employees) determine efficiency in a sample of Turkish banks. The 2000 financial crisis was a wake-up call for bank efficiency and corporate governance. As a result, better corporate governance mechanisms have been able to improve risk/return efficiency when the economic, regulatory, and supervisory environments are more stable and bank products are more complex.

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De Jonghe OG, Disli M, Schoors K. Corporate governance, opaque bank activities, and risk/return efficiency: Pre- and post-crisis evidence from Turkey. Journal of Financial Services Research. 2012;41(1-2):51-80.

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