The Effect of Board Size and Composition on the Efficiency of UK Banks

International Journal of the Economics of Business, 2011, 18 (3), 441-462 (Revised Version)

Coventry University, Economics, Finance and Accounting Applied Research Working Paper No. 2008-05

29 Pages Posted: 13 Feb 2008 Last revised: 28 Sep 2012

See all articles by Sailesh K. Tanna

Sailesh K. Tanna

Coventry University

Fotios Pasiouras

GSCM-Montpellier Business School

Matthias Nnadi

Cranfield University - School of Management

Date Written: February 1, 2008

Abstract

We examine a sample of 18 banks operating in the UK between 2001 and 2006 to provide for the first time evidence on the association between the efficiency of UK banks and two important aspects of board structure, namely board size and composition. We first use data envelopment analysis to estimate the technical, allocative, and cost efficiency of banks, and then use Tobit regression to investigate the impact of the board structure on these measures of efficiency. We estimate three specifications, one for each measure of efficiency, where the impact of each board aspect is examined individually and in conjunction with each other. In all the specifications we control for bank size, capital strength and time trends. We find some evidence of a positive association between board size and efficiency which is however not robust across our estimations. The composition of the board has a statistically significant and positive impact on efficiency across all our specifications.

Keywords: Board size, board composition, banks, corporate governance, efficiency, non-executives

JEL Classification: G21, G34

Suggested Citation

Tanna, Sailesh K. and Pasiouras, Fotios and Nnadi, Matthias, The Effect of Board Size and Composition on the Efficiency of UK Banks (February 1, 2008). International Journal of the Economics of Business, 2011, 18 (3), 441-462 (Revised Version) , Coventry University, Economics, Finance and Accounting Applied Research Working Paper No. 2008-05 , Available at SSRN: https://ssrn.com/abstract=1092252

Sailesh K. Tanna

Coventry University ( email )

Coventry
United Kingdom

Fotios Pasiouras (Contact Author)

GSCM-Montpellier Business School ( email )

2300, Avenue des Moulins
Montpellier, 34185
France

Matthias Nnadi

Cranfield University - School of Management ( email )

Bedfordshire, MK43 0AL
United Kingdom

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
630
Abstract Views
2,605
rank
55,343
PlumX Metrics