Failures in governance, especially in regard to boards of directors, have been blamed for the [2007][2008] financial crisis. The increased public scrutiny regarding the actions and role of the board of directors in banks, following the crisis, inspires to examine whether and to what extent the characteristics of banks' boards influence their performance in the crisis. Using a sample of 72 publicly listed European banks, we find that banks with more independent and busy boards experienced worse stock returns during the crisis.Conversely, the better performing banks had more banking experts serving as supervisory directors.Additionally, we find that gender and age diversity improved banks' performance during the crisis; hence, diversity matters. We also construct a governance quality index on the basis of board characteristics and conclude that governance quality positively affects banks' returns during the crisis. Overall, we find evidence that banks' performance during the financial crisis is a function of their boards' characteristics.

This research has been financed by the European Regional Development Fund through COMPETE 2020-Programa Operacional Competitividade e Internacionalização (POCI) and by Portuguese public funds through FCT (Fundação para a Ciência e a Tecnologia) in the framework of the project POCI-01-0145-FEDER-006890 Este trabalho foi financiado pelo Fundo Europeu de Desenvolvimento Regional (FEDER) através do COMPETE 2020-Programa Operacional Competitividade e Internacionalização (POCI) e por fundos nacionais através da FCT (Fundação para a Ciência e a Tecnologia) , no âmbito do projeto

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