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: Suggested Citation