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Bank Ownership, Board Characteristics and Performance: Evidence from Commercial Banks in India

Jayati Sarkar () and Subrata Sarkar ()
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Jayati Sarkar: Indira Gandhi Institute of Development Research, A.K. Vaidya Marg, Goregaon (E), Mumbai 400 065, India
Subrata Sarkar: Indira Gandhi Institute of Development Research, A.K. Vaidya Marg, Goregaon (E), Mumbai 400 065, India

International Journal of Financial Studies, 2018, vol. 6, issue 1, 1-30

Abstract: We study the effect of board governance in state-owned and private banks by undertaking a study of commercial banks in India that has both bank groups. Covering a ten-year period from 2003 to 2012 that witnessed a large number of governance reforms in India, the results of our empirical analysis provide evidence of strong ownership effects with board independence exhibiting a significant positive correlation with the performance of private banks and a significant but negative correlation with the performance of state-owned banks. The effect of CEO duality is negative in state-owned banks where incidence of CEO duality is high. We find that a longer CEO tenure has significant positive effects on bank outcomes with these effects strengthening in the later years of CEO tenure. Our results have governance implications for strengthening the composition of board of directors and CEO tenure especially in state-owned banks.

Keywords: banks; regulation; ownership; board of directors; CEO duality; CEO tenure (search for similar items in EconPapers)
JEL-codes: G1 G2 G3 F2 F3 F41 F42 (search for similar items in EconPapers)
Date: 2018
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