Board members' education and bank performance: Evidence from a bail-outed country

This paper makes the attempt to deeply explore the role of the board of directors in the Portuguese banking sector. For that, all types of information were collected in what concerns to ongoing Portuguese banking reforms. The level of effectiveness of the boards in the Portuguese banking sector was also researched. For that, all Portuguese banks functioning in the period of analysis 2007-2011 were analyzed. In this study, research was made considering a large number of board characteristics (qualifications, university prestige taking into consideration international rankings).

All available information of the boards’ members was obtained from BoardEx database, annual reports, interim reports and press releases. Financial data were obtained from Bankscope database and from annual reports of Banks. To verify the impact of the academic qualifications of board members on bank performance, ordinary least squares (OLS) regressions were employed.

We used a model which allows an analysis showing that there is no significant influence of “eduindex” over Banks’ ROAE. The same conclusion results from the analysis of the first regression which considers as dependent variable banks’ ROAA, meaning that “eduindex” is not significant in terms of the evolution of banks’ ROAA. Moreover, contrarily to what it was expected, the variable “execomp11” does not evidence a significant influence neither over banks’ ROAA nor banks’ ROAE. In this case and in relative terms, execomp11of state-owned banks is lower when compared to private banks (considering their dimension) what does not seem to have a significant impact.

This study allows very interesting conclusions on Board Members’ Education and Banks Performance.