The influence of selected managerial quality and board composition variables on the performance of German cooperative banks – an analysis of age, gender, education and experience as well as board size and composition

Can the age, education, experience and gender of executive board members, as well as the board size and composition, have an influence on the long-term sustainability of German cooperative banks? Due to declining profit margins, German cooperative banks are facing increasing threats to their future existence. However, the disappearance of cooperative banks from the German banking landscape would have serious consequences, as they fulfil important functions in the German financial and economic system. In particular, their dense branch network enables a large part of the population to participate in payment transactions and they are a key employer in many regions. At the same time, German cooperative banks played an important role in supporting the European banking system during the financial crisis in 2007/2008. The success of these cooperative banks is influenced by those leading them. Due to their strategic and operational tasks, these leaders play a decisive role, as these banks tend to be small in terms of their balance sheet and in international comparison.
This thesis aims to find out how the age, education, experience and gender of the executive board members as well as board size and composition influence the performance and thus the sustainability of German cooperative banks. The findings should make an important contribution to the long-term survival of cooperative banks in Germany.
To establish the influence of these factors, empirical data was collected on manager qualities (age, education, gender and experience), board composition, board size, and the Gross Profit Margin over a 5 and a 10-year period. The data was statistically evaluated with the help of regression analyses.
The results reveal correlations between the age of the executive board members, board size and Gross Profit Margin over periods of 5 and 10 years. As the age of a bank’s executive board increases, the bank’s medium- and long-term performance decreases. Furthermore, a bank’s medium- and long-term performance is worsened by employing more than the two executive board members that are required by law. The descriptive interpretations indicate that banks whose executive board members have no education other than a higher education degree perform worse than other banks over the medium and long term, although no correlations could be established on the basis of the statistical evaluations. Similarly, executive board members who have held more than one previous board position also have a negative impact on the bank’s performance. No correlations were found between the bank’s performance and the gender of the executive board members or the executive board being led by two or more CEOs with equal rights (dual leadership).
The correlations found in this research will serve as a basis for further in-depth investigations. The thesis fills gaps in the literature and contributes to Signalling Theory, Screening Theory, Principal Agent Theory, Upper Echelon Theory and several managerial competencies theories. At the same time, the results provide a basis for formulating practical decision-making criteria for supervisory boards to consider when selecting new executive board members.