Importance of Corporate Governance: Evidence from Kosovo’s Banking Sector

Abstract

This study identifies and assesses the impact and effect of corporate governance (CG), as a good practice mechanism, as well as some specific financial indicators on the performance of the banking sector in Kosovo. The data used in the research are defined as secondary data that include nine (9) commercial banks and cover the period 2013–2020. The analysis applied to data processing is the dynamic approach through 2SLS estimation for the dependent variables ROA, ROE, and NIM. The results obtained at the end of the study show that all variables applied in this research, depending on the variable defined for evaluation, have a significant impact on the performance of the banking sector. The results also show that the most adequate measure for assessing a bank’s performance is the net interest margin (NIM). This research paves the way for debate and discussion on the governing structures of financial institutions and policymakers.

An empirical assessment of corporate governance components and their impact on profitability: evidence of listed banks in Indonesia

“…The main components of GCG that are recognized to influence funding decisions are board size, board independence, executive compensation, and executive camp. Implementing GCG can prevent decision-making mistakes that automatically increase the company's value, which is reflected in profitability (Durguti & Kryeziu, 2021). Research conducted by Anjani & Yadnya (2017) found that GCG positively and significantly affects company profitability.…”