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

2021 ◽  
Vol 23 (2) ◽  
pp. 5-32
Author(s):  
Esat A. Durguti ◽  
◽  
Nexhat Kryeziu ◽  
Keyword(s):  
Corporate Governance ◽  
Financial Institutions ◽  
Banking Sector ◽  
Good Practice ◽  
Secondary Data ◽  
Financial Indicators ◽  
Dynamic Approach ◽  
Net Interest Margin ◽  
Dependent Variables ◽  
The Impact

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.

scholarly journals Good Corporate Governance And Financial Performance On Capital Adequacy Ratio: A Reflection Of Indonesian Conventional Banking

2021 ◽  
Vol 7 (2) ◽  
pp. 293-306
Author(s):  
Yuli Agustina ◽  
Agung Winarno ◽  
Ariska Dyan
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
Secondary Data ◽  
Capital Adequacy ◽  
Self Assessment ◽  
Good Corporate Governance ◽  
Net Interest Margin ◽  
Capital Adequacy Ratio ◽  
Using Data ◽  
The Impact

The purpose of this study is to determine the impact of good corporate governance, as well as financial performance as measured by non-performing loans, net interest margin, return on assets, and loan to deposit ratios, on the capital adequacy ratio of conventional banking in the period 2015-2019, using data from the Federal Reserve. The composite value of banking self-assessment is the indicator that was utilized to determine good corporate governance in the context of this study. The quantitative approach used in this study was combined with secondary data. Purposive sampling was used in this study to select a sample of 35 banks, which was then analyzed. The findings revealed that GCG, NPL, ROA, and LDR had no impact on CAR. This occurs because the revenues obtained by the bank are used to mitigate the bank's operational risk, and so have no effect on the bank's capital adequacy ratio (CAR). The NIM has a negative and statistically significant effect on the CAR. This is due to the fact that the NIM indicates that the quantity of loans granted is increasing, implying that the risk faced by the bank is also increasing.

An index to study corporate governance in banks in India

2020 ◽  
Vol 4 (2) ◽  
pp. 40-49 ◽  
Author(s):  
S. Sandhya ◽  
Neha Parashar
Keyword(s):  
Corporate Governance ◽  
Capital Adequacy ◽  
Return On Assets ◽  
Good Corporate Governance ◽  
Net Interest Margin ◽  
Capital Adequacy Ratio ◽  
Dependent Variables ◽  
Governance Practices ◽  
The Impact ◽  
The Relationship

There are many factors that affect corporate governance (CG). It is highly difficult to comprehend corporate governance and define it. Yet, research is imperative to understand the changing specific needs of good corporate governance practices and the impact of such practices. As banks have special governance needs, in this study the corporate governance of banks in India has been studied with the help of corporate governance index (GCI) especially designed for banks. Following the method used by Ararat, Black, and Yurtoglu (2017) to investigate the effectiveness of corporate governance, the index was divided into six sub-indices and to test the index it was used to find the correlation of CG practices with the banks profitability measured in terms of return on assets (RAO) and net interest margin (NIM) as dependent variables. The fixed regression model was run to know the relationship between the sub-indices and the dependent variables. Apart from the CG index, capital adequacy ratio (CAR) and Net NPA ratio were taken as independent variables. A weak correlation was found between CG and ROA and NIM that contributes to the findings of Fallatah and Dickins (2012).

scholarly journals An attempt at defining the impact of financial crises on changes to the models of corporate governance

2021 ◽  
Vol 0 (0) ◽  
Author(s):  
Stanisław Rudolf
Keyword(s):  
Corporate Governance ◽  
Financial Institutions ◽  
Financial Crises ◽  
Critical Analysis ◽  
International Institutions ◽  
Good Practice ◽  
Legal Regulations ◽  
Anglo Saxon ◽  
The Impact

Abstract This study aims to define the impact of two largest crises of 1997–1998 and 2007–2008 on changes to the models of corporate governance. In order to achieve the assumed aim, a critical analysis of specialist literature and relevant legal regulations has been applied. The analysis is focused on changes in the main models of corporate governance, namely: in the Anglo-Saxon (monistic) model and in the German (dualistic) model. Generally, they can be defined as of evolutionary nature but some deeper changes have taken place under the influence exerted by the above-mentioned crises. The latter crisis has emphasized the important role of corporate governance in banks and other financial institutions. Changes in corporate governance are largely affected by international institutions or organizations, such as the Organization for Economic Cooperation and Development (OECD) or the European Commission. Their recommendations and guidelines have contributed to the dissemination of so-called good practice codes. The considerations presented below allow the author to state that in both analyzed models of corporate governance, changes occur in the same or similar direction lines (the phenomenon of convergence). It can be also observed that the first analyzed crisis has caused larger changes in the monistic model, whereas the second crisis has affected the dualistic model in a more significant way.

scholarly journals Corporate Governance Characteristics and Environmental, Social & Governance (ESG) Performance: Evidence from the Banking Sector of Pakistan

2021 ◽  
Vol 7 (1) ◽  
pp. 35-50
Author(s):  
Samina Rooh ◽  
Muhammad Zahid ◽  
Muhammad Farooq Malik ◽  
Muhammad Tahir
Keyword(s):  
Corporate Governance ◽  
Banking Sector ◽  
Stock Exchange ◽  
Gender Diversity ◽  
Secondary Data ◽  
Return On Assets ◽  
Positive Role ◽  
Developed Economies ◽  
Regulatory Bodies ◽  
The Impact

The purpose of the paper is to examine the impact of corporate governance on environmental, social, and governance (ESG) performance.This paper alsoinvestigates the influence of corporate governance on environmental, social, and governance (ESG) disclosure.The majority of previous empirical research studies have either centered on ESG disclosure in developed economies, but the present problem concerning the corporate sector is defining the role of corporate governance in improving ESG performance inthe banking sectors of Pakistan.This paper is based on quantitative and secondary data approaches. The datawas collected fromthe annual reportsof 17 public and privatecommercial banks of Pakistan through an adapted ESG index. This study applied the Stata 13.0 panel data approach to analyzing the effect of corporate governance on ESG performance. Theresults showed that gender diversity, boardindependence,and return on assets(ROA) positively affect ESG performance. The board size and firm size havean insignificant impact on the ESG performance. Furthermore, firm age and previous year ESG practices (lag of ESG) have a significant positive role inthe improvement of ESG performance.However, in contrast, firm leverage has a negative significant effect on the ESG practices of the banking sectors.This papertries to fulfill the gap by examiningcorporate governance and ESG performance in the banking sectors ofPakistan. The findings of the study have significant implications for the top management of the banks, financial experts, regulatory bodies, investment advisors, academics practitioners, and Pakistan stock exchange towards the better implementation of corporate goverance and ESG practices. 

scholarly journals Assessing the Impact of Corporate Governance Index on Financial Performance in the Romanian and Italian Banking Systems

2021 ◽  
Vol 13 (10) ◽  
pp. 5535
Author(s):  
Marco Benvenuto ◽  
Roxana Loredana Avram ◽  
Alexandru Avram ◽  
Carmine Viola
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
Banking Sector ◽  
Research Question ◽  
Interactive Effect ◽  
Banking System ◽  
Capital Adequacy ◽  
Banking Systems ◽  
Governance Index ◽  
The Impact

Background: Our study aims to verify the impact of corporate governance index on financial performance, namely return on assets (ROA), general liquidity, capital adequacy and size of company expressed as total assets in the banking sector for both a developing and a developed country. In addition, we investigate the interactive effect of corporate governance on a homogenous and a heterogeneous banking system. These two banking systems were chosen in order to assess the impact of corporate governance on two distinct types of banking system: a homogenous one such as the Romanian one and a heterogeneous one such as the Italian one. The two systems are very distinct; the Romanian one is represented by only 34 banks, while the Italian one comprises more than 350 banks. Thus, our research question is how a modification in corporate governance legislation is influencing the two different banking systems. The research implication of our study is whether a modification in legislation, thus in the index of corporate governance, is feasible for two different banking sectors and what the best ways to increase the financial performance of banks are without compromising their resilience. Methods: Using survey data from the Italian and Romanian banking systems over the period 2007–2018, we find that the corporate governance has a significant, positive and long-lasting effect on profitability and capital adequacy in both countries. Results: Taking the size of the company into consideration, the impact of the Index of Corporate Governance (ICG) on a homogenous banking system is positive while the impact on a heterogeneous banking system is negative. Conclusions: Our study provides evidence of the impact of IGC on financial performance and sheds light on the importance of the size of the company. Therefore, one can state that the corporate governance principles applied do not encourage the growth of large banks in heterogeneous banking sectors, thereby suggesting new avenues of research associated with new perspectives.

Do disclosure and transparency affect bank’s financial performance?

2019 ◽  
Vol 19 (6) ◽  
pp. 1344-1361
Author(s):  
Isaiah Oino
Keyword(s):  
Risk Management ◽  
Corporate Governance ◽  
Financial Performance ◽  
Financial Institutions ◽  
Content Type ◽  
Loan Portfolios ◽  
Cent Level ◽  
Transparency And Disclosure ◽  
The Impact

Purpose The purpose of this paper is to examine the impact of transparency and disclosure on the financial performance of financial institutions. The emphasis is on assessing transparency and disclosure; auditing and compliance; risk management as indicators of corporate governance; and understanding how these parameters affect bank profitability, liquidity and the quality of loan portfolios. Design/methodology/approach A sample of 20 financial institutions was selected, with ten respondents from each, yielding a total sample size of 200. Principal component analysis (PCA), with inbuilt ability to check for composite reliability, was used to obtain composite indices for the corporate governance indicators as well as the indicators of financial performance, based on a set of questions framed for each institution. Findings The analysis demonstrates that greater disclosure and transparency, improved auditing and compliance and better risk management positively affect the financial performance of financial institutions. In terms of significance, the results show that as the level of disclosure and transparency in managerial affairs increases, the performance of financial institutions – as measured in terms of the quality of loan portfolios, liquidity and profitability – increases by 0.3046, with the effect being statistically significant at the 1 per cent level. Furthermore, as the level of auditing and the degree of compliance with banking regulations increases, the financial performance of banks improves by 0.3309. Research limitations/implications This paper did not consider time series because corporate governance does not change periodically. Practical implications This paper demonstrates the importance of disclosure and transparency in managerial affairs because the performance of financial institutions, as measured in terms of loan portfolios, liquidity and profitability, increases by 0.4 when transparency and disclosure improve, with this effect being statistically significant at the 1 per cent level. Originality/value The use of primary data in assessing the impact of corporate governance on financial performance, instead of secondary data, is the primary novelty of this study. Moreover, PCA is used to assess the weight of the various parameters.

Is internal and external mechanism of governance enriching the performance of the banking sector of Pakistan?

2017 ◽  
Vol 17 (4) ◽  
pp. 629-642 ◽  
Author(s):  
Sundas Sohail ◽  
Farhat Rasul ◽  
Ummara Fatima
Keyword(s):  
Corporate Governance ◽  
Banking Sector ◽  
Good Governance ◽  
Random Effect ◽  
Random Effect Model ◽  
General Meeting ◽  
Governance Structure ◽  
Board Structure ◽  
Content Type ◽  
The Impact

Purpose The purpose of this study is to explore how governance mechanisms (internal and external) enhance the performance of the return on asset (ROA), return on equity (ROE), earning per share (EPS) and dividend payout ratios (DP) of the banks of Pakistan. The study incorporates not only the internal factors of governance (board size, out-ratio, annual general meeting, managerial ownership, institutional ownership, block holder stock ownership and financial transparency) but also the external factors (legal infrastructure and protection of minority shareholders, and the market for corporate control). Design/methodology/approach The sample size of the study consists of 30 banks (public, private and specialized) listed at the Pakistan Stock Exchange (PSE) for the period 2008-2014. The panel data techniques (fixed or random effect model) have been used for the empirical analysis after verification by Hausman (1978) test. Findings The results revealed that not only do the internal mechanisms of governance enhance the performance of the banking sector of Pakistan but external governance also plays a substantial role in enriching the performance. The findings conclude that for a good governance structure, both internal and external mechanisms are equally important, to accelerate the performance of the banking sector. Research limitations/implications Internal and external mechanisms of corporate governance can also be checked by adding some more variables (ownership i.e. foreign, female and family as internal and auditor as external), but they are not added in this work due to data unavailability. Practical implications The study contributes to the literature and could be useful for the policy makers who need to force banks to mandate codes of governance through which they can create an efficient board structure and augment the performance. The investments from different forms of ownership can be accelerated if they follow the codes properly. Social implications The study facilitates the bankers in incorporating sound codes of corporate governance to enhance the performance of the banks. Originality/value This work is unique as no one has explored the impact of external mechanism of governance on the performance of the banking sector of Pakistan.

scholarly journals Does Governance Affect Compliance with IFRS 7?

2021 ◽  
Vol 14 (6) ◽  
pp. 239
Author(s):  
Amal Yamani ◽  
Khaled Hussainey ◽  
Khaldoon Albitar
Keyword(s):  
Corporate Governance ◽  
Voluntary Disclosure ◽  
Audit Committee ◽  
Banking Sector ◽  
Mandatory Disclosure ◽  
Disclosure Requirements ◽  
Corporate Governance Codes ◽  
Ifrs 7 ◽  
Enforcement Mechanisms ◽  
The Impact

Although there has been considerable research on the impact of corporate governance on corporate voluntary disclosure, empirical evidence on how governance affects compliance with mandatory disclosure requirements is limited. We contribute to governance and disclosure literature by examining the impact of corporate governance on compliance with IFRS 7 for the banking sector in Gulf Cooperation Council (GCC). We use a self-constructed disclosure index to measure compliance with IFRS 7. We use regression analyses to examine the impact of board characteristics, audit committee characteristics and ownership structure on compliance with IFRS 7. Using a sample of 335 bank-year observations for GCC listed banks over the period 2011–2017, we report evidence that corporate governance variables affect compliance with IFRS 7. However, the significance of these variables depends on the type of the regression model used. Our findings suggest that governance matters for mandatory disclosure requirements. So to improve the level of compliance, regulators, official authorities, and policymakers should intensify their efforts toward improving corporate governance codes, following up their implementation and enhancing the enforcement mechanisms.

COVID -19 and Indian Financial Markets: A Review

2020 ◽  
Vol 16 (02) ◽  
pp. 1-8
Author(s):  
Kamaldeep Kaur Sarna
Keyword(s):  
Financial Markets ◽  
Financial Institutions ◽  
Financial Services ◽  
Stock Markets ◽  
Global Economy ◽  
Banking Sector ◽  
Global Financial Crisis ◽  
Negative Impact ◽  
Management Strategies ◽  
The Impact

COVID-19 is aptly stated as a Black Swan event that has stifled the global economy. As coronavirus wreaked havoc, Gross Domestic Product (GDP) contracted globally, unemployment rate soared high, and economic recovery still seems a far-fetched dream. Most importantly, the pandemic has set up turbulence in the global financial markets and resulted in heightened risk elements (market risk, credit risk, bank runs etc.) across the globe. Such uncertainty and volatility has not been witnessed since the Global Financial Crisis of 2008. The spread of COVID-19 has largely eroded investors’ confidence as the stock markets neared lifetimes lows, bad loans spiked and investment values degraded. Due to this, many turned their backs on the risk-reward trade off and carted their money towards traditionally safer investments like gold. While the banking sector remains particularly vulnerable, central banks have provided extensive loan moratoriums and interest waivers. Overall, COVID-19 resulted in a short term negative impact on the financial markets in India, though it is making a way towards V-shaped recovery. In this context, the present paper attempts to identify and evaluate the impact of the pandemic on the financial markets in India. Relying on rich literature and live illustrations, the influence of COVID-19 is studied on the stock markets, banking and financial institutions, private equities, and debt funds. The paper covers several recommendations so as to bring stability in the financial markets. The suggestions include, but are not limited to, methods to regularly monitor results, establishing a robust mechanism for risk management, strategies to reduce Non-Performing Assets, continuous assessment of stress and crisis readiness of the financial institutions etc. The paper also emphasizes on enhancing the role of technology (Artificial Intelligence and Virtual/Augmented Reality) in the financial services sector to optimize the outcomes and set the path towards recovery.

scholarly journals Corporate Governance, Political Connections, and Bank Performance

2019 ◽  
Vol 7 (4) ◽  
pp. 62 ◽  
Author(s):  
Haris ◽  
Yao ◽  
Tariq ◽  
Javaid ◽  
Ain
Keyword(s):  
Corporate Governance ◽  
Profit Margin ◽  
Political Connections ◽  
Return On Assets ◽  
Board Size ◽  
Bank Profitability ◽  
Return On Equity ◽  
Net Interest Margin ◽  
The Impact ◽  
Interest Margin

This study investigates the impact of corporate governance characteristics and political connections of directors on the profitability of banks in Pakistan. The study uses the data of 26 domestic banks over the latest and large period of 2007–2016. Our findings firstly affirm that bank profitability is negatively affected by the presence of politically connected directors on the board, reporting significantly lower return on assets, return on equity, net interest margin, and profit margin. Secondly, our findings also affirm the negative political influence on the sustainability of the banking industry, reporting significantly lower return on assets, return on equity, net interest margin, and profit margin during the government transition of banks having politically connected directors sitting on their board. Our findings further report an inverted U-shaped relationship between board size and bank profitability, suggesting that a board size beyond 8–9 members decreases the profitability. The study further finds a positive impact of board composition, board independence, and director compensation on bank profitability, while also finding a negative impact of frequent board meetings, presence of foreign directors, and audit committee independence.

Sign in / Sign up

Export Citation Format

Share Document