The Mutual Impacts of Corporate Governance Dimensions and Legal Protection Systems on the Performance of European Banks: A Post-Crisis Study

Hani El-Chaarani
European Research Studies Journal, Volume XX, Issue 2A, 538-567, 2017
EOI: 10.11214/thalassinos.20.02.033

Abstract:

The paper provides new evidence on the relation between corporate governance practices, legal rights and European banks’ performance during the post-crisis period. Using a sample of 935 banks in 30 European countries, the results reveal that at a high level of legal protection European banks are more able to follow the international recommendations and codes of corporate governance practices and vice-versa.Additional analysis shows that all the corporate governance variables have the same impacts on the banks’ performance. At low, middle and high levels of legal protection, the results reveal positive impacts of committees’ number (such as remuneration, nomination and audit committee) and independent members of banks’ boards.The other dimensions of corporate governance (ownership concentration, executive pay and CEO duality) do not have any impact on bank performance. Only at the low level of legal protection the results show a negative impact on board size on European banks’ performance.


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