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Board governance and bank performance: A meta- analysis

Madhur Bhatia and Rachita Gulati ()

Research in International Business and Finance, 2021, vol. 58, issue C

Abstract: Using a database of 56 studies on corporate governance in the banking industry that were published between 2007 and 2019, this study performs a meta-analytic review to examine the impact of board governance on bank performance. We investigate how board size, CEO duality, outside directors, and female directors on board play a role in determining bank performance. Variations in the relationship between board governance and bank performance that attribute to moderating effects of potential moderators, including the system of corporate governance, bank performance measures, the definitions of governance variables, publication quality, and endogeneity concerns, are also encapsulated. Our study shows that bank performance is positively associated with larger boards and a high proportion of outside and female directors, supporting the resource dependence theory. We find that the moderating variables considerably alter the link between board governance and bank performance. The study offers ways to enhance board effectiveness by enforcing governance practices in the banking systems based on each countries’ legal and institutional framework and suggests reconsidering mandates for smaller boards and duality on boards of banking firms.

Keywords: Board governance; Bank performance; Meta-analysis; Agency theory; Resource dependence theory; Stewardship theory (search for similar items in EconPapers)
JEL-codes: G21 G34 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:58:y:2021:i:c:s0275531921000465

DOI: 10.1016/j.ribaf.2021.101425

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