Effects of Corporate Governance on Banking Performance of Commercial Banks in Bangladesh (original) (raw)
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Journal of Asian Business Strategy, 2022
This study tries to determine the impact of Corporate Governance (CG) on the performance of Commercial Banks (CB) in Bangladesh. Data are collected from different banks listed under DSE for the period starting from 2015 to 2020. For analyzing the data and testing hypothesis Pearson’s correlation and OLS regression models are used to assess the relationship among the performance of the banks and CG related predictor variables like Board Size (BS), Board Independence (BI), Audit Committee (AC), Risk Management Committee (RMC), and some control variables like Firm Age (FA), Firm Size (FS) and Market Capitalization (MC). The regression analysis results showed a mixed result. The BS and BI are significantly affirmatively related with ROE and positively correlated with ROA. The BS is affirmatively related with Tobin’s Q, but BI is significantly negatively related. No significant positive connection is found between the AC, RMC and ROE, ROA. The RMC is significant affirmatively related wit...
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Corporate Governance Expedites Bank Performance: Solving The Paradox From Bangladesh Perspective
International Journal of Business Marketing and Management (IJBMM), 2022
The financial sector plays a vital role in the economic development of a country. In Bangladesh also this sector is doing well in different indicators. At the same time, a good number of banks and corporations became weakened over the years, and the consequent collapse of the stock market caused colossal losses to investors, where the absence of firm-level corporate governance was sharply identified. Keeping these into consideration, this present study has been attempted to find out the corporate governance factors that affect bank performance. In this study, bank performance has been measured by using the ratio of Tobin Q (as a dependent variable), and as independent variables board independence, the board size, institutional ownership, size of the audit committee, foreign board members, and the number of board meeting have been used. All listed private commercial banks (30 in number) have been considered as samples and data have been collected from the annual reports of the respective banks from the year 2013 to 2018. Multiples linear regression model has been used to find out the relationship and their significance. VIF was also tested to detect multicollinearity. The study found that institutional shareholding, size of the audit committee, and foreign members on board have a positive and significant influence on bank performance, on the contrary, the board size, independent members on board, and the number of board meetings have a negative but significant influence on bank performance.
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Corporate governance plays a major role in macroeconomic stability and provides the appropriate environment for economic growth as well as society welfare. Good corporate governance practices are important in reducing risks for investors, attracting investment capital and enhancing performance of firms. The aim of this paper is to observe the relationship between corporate governance and firm performance in banking industries of Bangladesh. This study gave attention to nine variables i.e. Board Size, Board Composition, Board Ownership, Institutional Ownership, Foreign Ownership, Brand name of Audit firm, Quality of Audit Committee, Audit Committee Meeting and Gender are used to measure the corporate governance whereas return on assets, return on equity, and net profit are used to measure the firm's performance. Ten (15) banking companies of Bangladesh representing the period of 2010 to 2015 were selected purposively used in this study. The descriptive analysis, correlation and multiple regression analysis were applied to test the impact of corporate governance on firm performance. The results showed that there were impacts of corporate governance on ROA. However, the study found a positive relationship between the variables of corporate governance and firm's performance.
Impact of corporate governance on bank's performance in Bangladesh
2019
It is indeed a great honor to be able to hand over my internship report on " Impact of Corporate Governance on Bank's performance in Bangladesh". I have attempted my best to finish the report with the essential data and recommended proposition in a significant compact and comprehensive manner as possible. The information and data used in this report are mainly based on secondary resources like annual reports and some research reports previously done by various authors. I am grateful to you for allowing me to work on this issue. While working on this report, I have gained much knowledge about the bank's current state as well as the importance of corporate governance in a firm. I trust that this report will meet the desires.
The Impact of Corporate Governance on Bank Performance: Empirical Evidence from Bangladesh
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This paper effort to find out the impact of corporate governance practices on bank performance in Bangladesh. In this paper, we examine 85 observations from 17 publicly traded commercial banks listed in Dhaka Stock Exchange (DSE) over the period of 2013-2017. We use the econometric model and pooled ordinary least square regression analysis to find out the correlations and regression among independent variables (size of the board, board composition, and chief executive officer status) and dependent variables (return on asset, return on equity and earnings per share). This research reveals that the board of director has a positive significant impact on ROA, ROE, and EPS. Independent board of director has a positive significant impact on ROE and EPS. Chief executive officer has a positive significant impact on ROA. In addition, most of the cases large bank size positively affecting the performance of Bangladeshi bank. Finally, there is a positive significant relationship between corpor...
Corporate governance practices in the banking sector of Bangladesh: do they really matter?
Banks and Bank Systems, 2017
A well governed institution is expected to use its resources optimally and, thus, perform more efficiently and contribute positively to economic development of a nation. However, often, it can be seen that poor management of the stakeholders leads to less than optimal strategic directions for an institution. Due to recent global financial crisis and rising issues of the Bangladeshi banking sector, corporate governance is one of the factors that have gained considerable attention. Recent drive of the governance issues of the banking sector of Bangladesh is expected to bring positive change in the financial sector and, hence, it is crucial to assess whether complying with governance codes leads to desired outcome or not. Specifically, the main purpose of this study is to examine the relationship between performances of commercial banks with corporate governance factor along with some internal and macroeconomic variables. Thus, the listed commercial banks in the Dhaka Stock Exchange (DSE) of Bangladesh were considered for the study. Subsequently, considering data availability of the time period (2011-2014), 29 listed commercial banks in the DSE have been considered and, hence, Ordinary Least Squared (OLS) regression models were used through Eviews 8.0 for analyzing the data. Though the study shows a positive relation between corporate governance and performances of banks, the statistical insignificance of the relation raises concern regarding various issues of corporate governance in the financial sector of Bangladesh.
Corporate Governance and Bank Performance: The Case of Bangladesh
Working Paper, 2013
Though a large body of empirical studies on corporate governance have emerged during the last decade, most of them were related to non-bank firm governance and have narrowly focused on the bank governance issues. As such the objective of this paper is to narrow down this gap and to contribute to the body of knowledge relating to bank governance. Particularly, this paper investigates the impact of governance on bank performance in Bangladesh where institutional, regulatory and legal environment are different than those in force in developed economies. In order to promote good governance, the Bangladesh Bank - the central bank of the country - promulgated codes of corporate governance for banks in 2003. This paper empirically investigates the influence of corporate governance mechanisms on financial performance of 25 listed banking companies in Bangladesh over the period 2003-2011. Estimated results demonstrate that the general public ownership and the frequencies of audit committee meetings are positively and significantly associated with return on assets (ROA), return on equity (ROE) and Tobin’s Q. Directors’ ownership and independent directors have significant positive effects on bank performance measured by Tobin’s Q.
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The study investigates the relationship between the corporate governance structure and performance of listed banks in Bangladesh. We find that board independence and board size have a significant positive impact on performance. However, female directors appear to have no impact on performance. Our evidence indicates that the extent of the managerial ownership level has a significant negative impact on bank performance. These results suggest that better corporate governance mechanisms are imperative for every banking company and should be encouraged for the interest of the investors and other stakeholders.