Managers and Efficiency in Banking

38 Pages Posted: 27 Feb 2007

Date Written: March 1, 2007


This paper presents evidence on the impact of managers on cost efficiency in banking. Stochastic frontier analysis is applied to a unique Finnish data set. The paper finds that manager age and education have strong yet complicated effects. University education enhances efficiency if the manager is running a large bank. Managing director changes are systematically followed by efficiency changes. Manager retirement typically causes an efficiency improvement, whereas other manager changes can either improve or weaken efficiency.

Keywords: efficiency, banking, managers

JEL Classification: G21, L25, M19

Suggested Citation

Kauko, Karlo, Managers and Efficiency in Banking (March 1, 2007). Bank of Finland Research Discussion Paper No. 11/2007, Available at SSRN: or

Karlo Kauko (Contact Author)

Bank of Finland ( email )

P.O. Box 160
FIN-00101 Helsinki

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