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http://ssrn.com/abstract=1740547
 
 

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Did Good Corporate Governance Improve Bank Performance During the Financial Crisis?


Emilia Vähämaa


Hanken School of Economics; University of Vaasa

Sami Vähämaa


University of Vaasa

March 31, 2011

Journal of Financial Services Research, Vol. 41, No. 1-2, pp. 19-35, 2012

Abstract:     
This paper focuses on the effects of corporate governance on bank performance during the financial crisis of 2008. Using data on large publicly-traded U.S. banks, we examine whether banks with stronger corporate governance mechanisms were associated with higher profitability and better stock market performance amidst the crisis. Our empirical findings on the effects of corporate governance on bank performance are mixed. Although the results suggest that banks with stronger corporate governance mechanisms were associated with higher profitability in 2008, our findings also indicate that strong governance may have had negative effects on stock market valuations of banks amidst the crisis. Nevertheless, we document that banks with strong corporate governance practices had substantially higher stock returns in the aftermath of the market meltdown, indicating that good governance may have mitigated the adverse influence of the crisis on bank credibility.

Number of Pages in PDF File: 31

Keywords: Corporate Governance, Bank Performance, Financial Crisis

JEL Classification: G01, G21, G30

working papers series


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Date posted: January 15, 2011 ; Last revised: April 25, 2012

Suggested Citation

Vähämaa, Emilia and Vähämaa, Sami, Did Good Corporate Governance Improve Bank Performance During the Financial Crisis? (March 31, 2011). Journal of Financial Services Research, Vol. 41, No. 1-2, pp. 19-35, 2012. Available at SSRN: http://ssrn.com/abstract=1740547 or http://dx.doi.org/10.2139/ssrn.1740547

Contact Information

Emilia Vähämaa
Hanken School of Economics ( email )
PB 287
Vaasa, Vaasa 65101
Finland
University of Vaasa ( email )
P.O. Box 700
Wolffintie 34
FIN-65101 Vaasa
Finland
Sami Vähämaa (Contact Author)
University of Vaasa ( email )
P.O. Box 700
FI-65101 Vaasa
Finland
+358 6 324 8197 (Phone)
+358 6 324 8344 (Fax)
HOME PAGE: http://www.uwasa.fi/~sami
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