Bank efficiency in the African banking sector: Does board independence matter?

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Abstract

This study examines the relationship between board independence and bank efficiency. Using a sample of 78 commercial banks operating in the African region from 2016 to 2019, the findings reveal that board independence significantly enhances technical efficiency, as measured by data envelopment analysis (DEA). Additionally, chief executive officer (CEO) duality, gender diversity on boards, and the presence of committees positively influence bank efficiency. The results also highlight the role of bank capitalization in improving overall bank efficiency. These findings suggest that adopting good governance mechanisms, such as increasing the number of independent administrators, female board members, and board committees, plays a crucial role in boosting bank efficiency.

Keywords: Corporate Governance, Board Independence, Data Envelopment Analysis, Panel Data, Bank Efficiency, Africa

Authors’ individual contributions: Conceptualization — S.B. and B.H.; Methodology — B.H.; Investigation — S.B.; Resources — S.B. and B.H.; Writing — S.B. and B.H.; Supervision — B.H.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: G21, G32, G34

Received: 07.03.2024
Accepted: 12.08.2024
Published online: 15.08.2024

How to cite this paper: Benjakik, S., & Habba, B. (2024). Bank efficiency in the African banking sector: Does board independence matter? Corporate Board: Role, Duties and Composition, 20(2), 50–66. https://doi.org/10.22495/cbv20i2art6