Corporate Governance and Efficiency in Banking : Evidence from Emerging Economies

This paper investigates the impact of corporate governance on bank efficiency across a sample of 139 commercial banks from 17 countries of Central and Eastern Europe during the period 2005-2012. The empirical findings indicate that implementing rigorous corporate governance structures is associated with higher costs for banks and a lower level of efficiency. But, during the crisis a tight governance mechanism significantly increases banks' cost and technical efficiencies. Also, tight risk management is associated with both higher cost and technical efficiency for more capitalized banks, while rigid supervisory boards are linked with higher technical efficiency for more capitalized banks