Board Characteristics and Credit‐Union Performance

Abstract

We examine the role of board characteristics on the performance of Australian credit unions during the period 2004–2012. Credit unions are unique as they are member‐owned institutions, and their directors are democratically elected by their members – an unusual governance structure that poses challenges for board effectiveness. We find that board remuneration, board expertise and attendance at meetings are associated with increased credit‐union performance and are consistent with the goal of maximising member benefits. While the unique features of credit unions limit the presence of external monitoring mechanisms, we provide evidence that these board characteristics are relevant for credit unions.