Download This PaperGood and Bad Banks? Governance, Human Capital of Top Managers and Performance
37 Pages Posted: 4 Oct 2014
Date Written: October 2, 2014
Abstract
Spanish savings banks (Cajas) and commercial banks have experienced very different destinies. Before the crisis both types of banks shared, almost equally, most of the financial Spanish market. Cajas were performing well. Nowadays, the soundest Cajas have been forced to transform themselves into commercial banks, while the poor-performing ones have been either absorbed by rivals or rescued by the Government. Meanwhile Spanish commercial banks have overcome the crisis reasonably well. Our goal is to assess if such different outcomes are related to governance practices and the human capital of banks’ top managers. Some authors have pointed out that neither the formal governance institutions (i.e. the composition of the different governance bodies), nor the real governance (i.e. the role played by politicians) can explain these differences. We make use of an extended period data, covering both a boom period and a period of crisis, and we collect further information on chairmen’s human capital (previous banking experience, formal education, and political background) to get a better grasp of these important issues. History seems to matter and the use of a better organizational capital of the former chairmen, and the stakeholder composition can help us to get clearer results.
Keywords: corporate governance, financial crisis, financial risk, human capital, policy, Spanish banks
JEL Classification: G21, G32, G33, G34
Suggested Citation: Suggested Citation