Corporate governance structure and bank performance: evidence from an emerging economy

Molla, Md. Ibrahim; Islam, Md. Saiful; Rahaman, Md. Kayes Bin

doi:10.1108/jeas-05-2021-0083

Cited by 9 publications

(6 citation statements)

References 42 publications

(83 reference statements)

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“…According to resource dependency theory, a larger board is preferable to a smaller board because the board serves as a strategic resource that provides the organization with access to external resources that are critical to its success. Several empirical literature proves that the size of the BD is positively related to company performance, which supports this theoretical view (Ramadan and Hassan, 2022; Molla et al , 2021; Al Farooque et al , 2020; Hakimi et al , 2018).…”

Section: Review Of Literature and Hypothesis Developmentsupporting

confidence: 65%

Ownership structure, board characteristics, and performance of Indonesian Islamic rural banks

Mai,

Nansuri,

Setiawan

2024

IMEFM

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Purpose This study aims to examine the influence of ownership structure and board characteristics on the performance of Indonesian Islamic rural banks (IRB) using the system generalized method of moment model. Design/methodology/approach This research uses Indonesian IRB unbalanced annual panel data from 2016 to 2022. IRB performance is measured by return on assets (ROA), return on equity (ROE) and nonperforming financing (NPF). The ownership structure is represented by controlling shareholders, ownership of the board of directors (BD) and ownership of the board of commissioners (BC). Meanwhile, board characteristics are represented by the size of the BC, the proportion of female board directors and female president directors. Findings The results show that the ownership structure and board characteristics play an important role in improving the IRB’s performance. Technically, the results show that the size of the BC and the ownership of the BD increase all IRB performance measures. Female president directors and controlling shareholders improve IRB’s performance as measured by ROA and ROE. Women’s boards of directors improve IRB performance as measured by NPF. Meanwhile, the ownership of the BC does not show its effect on all IRB performance measures. Research limitations/implications This study fills a literature gap on the influence of ownership structure and board characteristics on IRB Indonesia’s performance. In addition, it adds understanding and insight for Islamic bank regulators, management and IRB depositors in Indonesia. Originality/value To the best of the authors’ knowledge, this study is one of the first to provide an empirical survey on the influence of controlling shareholders and board characteristics on IRB performance, particularly in Indonesia.

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Section: Review Of Literature and Hypothesis Developmentsupporting

confidence: 65%

Ownership structure, board characteristics, and performance of Indonesian Islamic rural banks

Mai,

Nansuri,

Setiawan

2024

IMEFM

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“…Hasil penelitian ini sejalan dengan penelitian yang dilakukan oleh Molla et al (2023) yang menunjukkan bahwa ukuran perusahaan berpengaruh positif signifikan terhadap kinerja keuangan perbankan dengan ROA dan ROE.…”

Section: Pembahasanunclassified

Pengaruh corporate governance terhadap performa keuangan bank yang tercatat di Bursa Efek Indonesia

Fanny,

Widoatmodjo

2024

J. Manaj. Bisnis dan Kewirausahaan

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This study aims to analyze the influence of audit committee size, board gender diversity, managerial ownership, foreign ownership with firm size, and firm age as variable control to bank performance measured by ROA and ROE. The research samples are 27 listed companies in the Indonesia Stock Exchange from 2018-2022 consisting of 127 observants determined by purposive sampling method. Hypothesis testing was conducted with linear regression using SPSS 25. The results of this research show that firm size has a positive significant effect on bank performance measured by ROA and ROE. Board gender diversity shows a positive effect on bank performance measured by ROA. Managerial ownership and foreign ownership show negative significant effects on bank performance by ROE. Firm age and audit committee size show no significant effects on bank performance measured by ROA and ROE. Penelitian ini bertujuan untuk menganalisis pengaruh ukuran komite audit, diversitas gender direksi, kepemilikan manajerial, dan kepemilikan asing, dengan ukuran perusahaan dan usia perusahaan sebagai variabel kontrol performa bank yang diukur dengan ROA dan ROE. Sampel penelitian merupakan 27 bank yang terdaftar di BEI tahun 2018-2022 dengan observasi berjumlah 127 menggunakan metode purposive sampling. Metode yang digunakan untuk menganalisis data adalah analisis regresi berganda dan diolah dengan SPSS 25. Hasil dari penelitian ini adalah ukuran bank yang berpengaruh positif signifikan terhadap kinerja bank yang diukur dengan ROA maupun ROE. Diversitas gender direksi berpengaruh positif signifikan pada performa bank diukur dengan ROA. Kepemilikan manajerial dan kepemilikan asing berpengaruh negatif signifikan terhadap kinerja bank dengan ROE. Usia bank dan jumlah komite audit tidak berdampak signifikan pada performa bank yang diukur dengan ROA dan ROE.

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“…Because the agent's ability to cover potential losses in the future is unpredictable, and because the principal is unaware of the needs and wants of the agents, the principal will design the contract to receive some profits from the agents. The principal wants to assign the contract in a way that increases his profit while paying the agent for carrying out the duty that is expected of him (Ibrahim, Saiful & Kayes, 2021).…”

Section: Theoretical Frameworkmentioning

confidence: 99%

Non-performing Loans and Deposit Money Banks’ Financial Performance: Empirical Evidence from Nigeria

Ughulu¹,

Inobemhe²,

Ughulu³

2023

JEPF

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Nigeria’s deposit money banks (DMBs) are financial institutions licensed by the Central Bank of Nigeria to mobilize demand and saving deposits from the surplus economic units for on-lending to the deficit economic units for investment and consumption purposes. In carrying out this intermediation function, DMBs are exposed to several risks including credit risk, market risk, interest rate risk, exchange rate risk, and others. Of these risks, the credit risk seems the most harmful to DMBs’ financial performance as its occurrence can easily and quickly send a bank into distress or outright liquidation. For over a decade now, DMBs in the country have been experiencing continuously increasing nonperforming loans portfolios. This type of scenario had led to poor financial performance among the Banks. It is for this reason that the present study seeks to verify empirically the impact of certain financial and macroeconomic variables on DMBs’ financial performance for the period 2001 to 2021, that is, 21 years. In doing this, we dissected financial performance into return on assets and return on equity. Hence, two separate models were specified in the study with return on asset and return on equity serving as the dependent variables in each of the models, while non-performing loans, loan-loss provisions, lending rate, bank size, monetary policy rate and inflation rate represented the independent variables. The longitudinal research design was adopted since the study’s data covered a specific timeframe. The fully modified ordinary least squares and the panel data regression techniques were used to analyze the data. The findings of the study revealed, among others, that non-performing loans exerted a negative impact on the financial performance of the DMBs in terms of return on assets and return on equity. It was, therefore, recommended that provisions for loan losses, even though appeared with positive impact on return assets and return on equity, should to be scaled up as the variable is frequently used as a strategic and effective means for mitigating loans losses and, invariably, the financial performance of the DMBs.

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Corporate governance structure and bank performance: evidence from an emerging economy

Cited by 9 publications

References 42 publications

Ownership structure, board characteristics, and performance of Indonesian Islamic rural banks

Ownership structure, board characteristics, and performance of Indonesian Islamic rural banks

Pengaruh corporate governance terhadap performa keuangan bank yang tercatat di Bursa Efek Indonesia

Non-performing Loans and Deposit Money Banks’ Financial Performance: Empirical Evidence from Nigeria

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