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Subprime crisis and board (in-) competence: private versus public banks in Germany

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Author Info

  • Harald Hau
  • Marcel Thum

Abstract

"We examine evidence for a systematic underperformance of Germany's state-owned banks in the current financial crisis and study if the bank losses can be traced to the quality of bank governance. For this purpose, we examine the biographical background of 592 supervisory board members in the 29 largest banks and find a pronounced difference in the finance and management experience of board representatives across private and state-owned banks. Measures of 'boardroom competence' are then related directly to the magnitude of bank losses in the recent financial crisis. Our data confirm that supervisory board (in-)competence in finance is related to losses in the financial crisis. Improved bank governance is therefore a suitable policy objective to reduce bank fragility." Copyright (c) CEPR, CES, MSH, 2009.

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Bibliographic Info

Article provided by CEPR & CES & MSH in its journal Economic Policy.

Volume (Year): 24 (2009)
Issue (Month): (October)
Pages: 701-752

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Handle: RePEc:bla:ecpoli:v:24:y:2009:i::p:701-752

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Cited by:
  1. Beate R. Jochimsen & Sebastian Thomasius, 2012. "The Perfect Finance Minister: Whom to Appoint as Finance Minister to Balance the Budget?," Discussion Papers of DIW Berlin 1188, DIW Berlin, German Institute for Economic Research.
  2. Vives, Xavier, 2010. "Competition and stability in banking," IESE Research Papers D/852, IESE Business School.
  3. Allen N. Berger & Thomas Kick & Klaus Schaeck, 2012. "Executive Board Composition and Bank Risk Taking," Working Papers 12004, Bangor Business School, Prifysgol Bangor University (Cymru / Wales).
  4. Tobias Körner & Isabel Schnabel, 2013. "Abolishing Public Guarantees in the Absence of Market Discipline," Ruhr Economic Papers 0437, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.

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