TY - JOUR
T1 - Corporate governance, opaque bank activities, and risk/return efficiency
T2 - Pre- and post-crisis evidence from Turkey
AU - De Jonghe, O.G.
AU - Disli, M.
AU - Schoors, K.
N1 - Appeared earlier as CentER Discussion Paper 2011-129
PY - 2012
Y1 - 2012
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.
M3 - Article
SN - 0920-8550
VL - 41
SP - 51
EP - 80
JO - Journal of Financial Services Research
JF - Journal of Financial Services Research
IS - 1-2
ER -