Does governance matter for bank stability? “MENA region case”

Djebali Nesrine ()
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Djebali Nesrine: Faculty of Law Economics and Management of Jendouba, University of Jendouba

Journal of Asset Management, 2023, vol. 24, issue 4, No 6, 312-328

Abstract: Abstract This study aims to contribute to settling the lack of consensus regarding the determinants of bank stability, not only by considering the board of directors and the ownership structure but also by including factors such as CEO compensation, risk, and the audit committee. The objective of this paper is to examine the impact of internal governance on the bank stability index. To achieve this goal, we used the annual data of a sample of seventy-six listed banks observed during the period 1999–2017. We used panel data analysis to estimate our econometric model. Our study finds that the correlation between board size, the audit committee, and the presence of a block of institutional investors is positive and increases bank stability. On the other hand, we have found that the presence of external investors and CEO remuneration negatively affect the stability of the banks in our context. Regarding the macroeconomic and political environment, we indicate that inflation, gross domestic product, and institutional quality as measured by political stability have a positive effect on bank stability, while bank size negatively affects their stability. The results suggest managerial implications that can be of great value to ensuring the success of MENA banks.

Keywords: Board quality; Ownership structure; Composite index; Bank stability; MENA region (search for similar items in EconPapers)
JEL-codes: F3 F36 G21 G28 O16 O53 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1057/s41260-023-00308-1

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