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Sitting on the fence: does having a 'dual-director' add to bank profitability?

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  • Maria Semenova
  • Polina Savchenko

Abstract

This article investigates how the combination of positions between the Board of Directors and the management affects bank's profitability. We use the 2010 bank-level data from 112 countries ( Bankscope ). Our results suggest that the positions combination reduce both banks' ROA and ROE. We also show that the higher is the proportion of the Board members, who also hold a managerial position, the lower is the profitability of a bank. Thus, the corporate governance regulation should go beyond a simple restriction on holding simultaneously the CEO and the head of Board of Directors positions.

Suggested Citation

  • Maria Semenova & Polina Savchenko, 2015. "Sitting on the fence: does having a 'dual-director' add to bank profitability?," Applied Economics Letters, Taylor & Francis Journals, vol. 22(8), pages 654-657, May.
  • Handle: RePEc:taf:apeclt:v:22:y:2015:i:8:p:654-657
    DOI: 10.1080/13504851.2014.964828
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    Cited by:

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    2. Maria Semenova & Polina Savchenko, 2015. "Sitting on the fence: does having a 'dual-director' add to bank profitability?," Applied Economics Letters, Taylor & Francis Journals, vol. 22(8), pages 654-657, May.
    3. Marina Brogi & Valentina Lagasio, 2019. "Do bank boards matter? A literature review on the characteristics of banks' board of directors," International Journal of Business Governance and Ethics, Inderscience Enterprises Ltd, vol. 13(3), pages 244-274.

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    More about this item

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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