| Title : | The effects of corporate governance on firm performance: a case study of Nepalese commercial bank | | Material Type: | printed text | | Authors: | Rosa Pandey, Author | | Publication Date: | 2014 | | Pagination: | 86p. | | Size: | GRP/Thesis | | Accompanying material: | 3/B | | General note: | Including bibilography | | Languages : | English | | Descriptors: | Banks
Banks and banking
Commercial banks
Corporate governance
Corporations-Finance
Nepal
| | Keywords: | 'corporate governance corporations finance banks banks and banking commercial banks Nepal' | | Class number: | 658.42 | | Abstract: | Corporate governance is an important concept which has been put into practice because of the needs of corporations to constantly be efficient and perform better; and it is this need that has made corporate governance involves the allocation of authority and responsibilities, i.e. the manner in which the business and affairs of a bank’s strategy and objectives; determine the bank’s risk tolerance; operate the bank’s business on a day-to- day basis; protect the interests of depositors, meet shareholder obligations, and take into account the interests of other recognized stakeholders; and align corporate activities and behavior with the expectation that the bank will operate in a safe and sound manner, with integrity and in compliance with applicable laws and regulations (Basel Committee, 2010). Thus, this study aims to analyze the relationship of corporate governance structure with performance of banks.
Studies on corporate governance have documented the significant impact of corporate governance structures on performance in both developed and emerging economies. Among others, corporate governance variables like board independence, audit committee independence, CEO duality etc. has been found as significant in predicting the performance. Based on the reviews of previous studies this study has proposed the model that essentially emphasize on the role of board structure and mechanism and audit committee mechanism in shaping the performance of the banks. Based on the reviews of studies this study has conceptual model for the study that essentially emphasize on the role of board structure and mechanism and audit committee mechanism in shaping the performance of the banks.
The study has used stratified sampling technique to divide the population into private, public and joint-venture banks. In addition, systematic random sampling method has been used to select the sample of 17 commercial banks from each stratum. Primary data has been collected through questionnaire survey among employees and executives of the sample banks while 8 years data from 2004/05 to 2011/12 has been collected from various secondary sources like annual reports of sample banks and consolidated financial reports prepared by Nepal Rastra Bank. Frequency of responses, percentages has been used to analyze the primary data while descriptive statistics, correlation analysis, regression have been carried out to examine the secondary data. The performance measures like Return on Equity (ROE), Return on Assets (ROA) of the banks have been used as the dependent variable while corporate governance variables like board size, board independence, audit independence and audit activity, CEO duality and non-performing loan have been considered as independent variables.
Based on the results of primary and secondary data, board structure and mechanism, audit committee mechanism of the banks in Nepal are important corporate governance mechanism in order of their relative importance that enhances the performance of the banks. To be more specific, board independence, CEO duality and audit committee independence are the corporate governance mechanisms that tend to influence the performance in positive manner. It implies that increase in any of these variables is likely to increase the performance of the banks. Besides, board size and the audit committee meetings are found to be insignificant in predicting the performance of the banks.
The opinion survey reveals that the current provisions made by central bank regarding the corporate governance are insufficient. The study recommends the banks to improve the level of corporate governance that not only improve the performance of an individual bank but also ensures the stability of banking system. Moreover, banks are suggested to adopt faire corporate governance practices to promote market confidence, attract additional capital through good disclosure and transparency.
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The effects of corporate governance on firm performance: a case study of Nepalese commercial bank [printed text] / Rosa Pandey, Author . - 2014 . - 86p. ; GRP/Thesis + 3/B. Including bibilography Languages : English | Descriptors: | Banks
Banks and banking
Commercial banks
Corporate governance
Corporations-Finance
Nepal
| | Keywords: | 'corporate governance corporations finance banks banks and banking commercial banks Nepal' | | Class number: | 658.42 | | Abstract: | Corporate governance is an important concept which has been put into practice because of the needs of corporations to constantly be efficient and perform better; and it is this need that has made corporate governance involves the allocation of authority and responsibilities, i.e. the manner in which the business and affairs of a bank’s strategy and objectives; determine the bank’s risk tolerance; operate the bank’s business on a day-to- day basis; protect the interests of depositors, meet shareholder obligations, and take into account the interests of other recognized stakeholders; and align corporate activities and behavior with the expectation that the bank will operate in a safe and sound manner, with integrity and in compliance with applicable laws and regulations (Basel Committee, 2010). Thus, this study aims to analyze the relationship of corporate governance structure with performance of banks.
Studies on corporate governance have documented the significant impact of corporate governance structures on performance in both developed and emerging economies. Among others, corporate governance variables like board independence, audit committee independence, CEO duality etc. has been found as significant in predicting the performance. Based on the reviews of previous studies this study has proposed the model that essentially emphasize on the role of board structure and mechanism and audit committee mechanism in shaping the performance of the banks. Based on the reviews of studies this study has conceptual model for the study that essentially emphasize on the role of board structure and mechanism and audit committee mechanism in shaping the performance of the banks.
The study has used stratified sampling technique to divide the population into private, public and joint-venture banks. In addition, systematic random sampling method has been used to select the sample of 17 commercial banks from each stratum. Primary data has been collected through questionnaire survey among employees and executives of the sample banks while 8 years data from 2004/05 to 2011/12 has been collected from various secondary sources like annual reports of sample banks and consolidated financial reports prepared by Nepal Rastra Bank. Frequency of responses, percentages has been used to analyze the primary data while descriptive statistics, correlation analysis, regression have been carried out to examine the secondary data. The performance measures like Return on Equity (ROE), Return on Assets (ROA) of the banks have been used as the dependent variable while corporate governance variables like board size, board independence, audit independence and audit activity, CEO duality and non-performing loan have been considered as independent variables.
Based on the results of primary and secondary data, board structure and mechanism, audit committee mechanism of the banks in Nepal are important corporate governance mechanism in order of their relative importance that enhances the performance of the banks. To be more specific, board independence, CEO duality and audit committee independence are the corporate governance mechanisms that tend to influence the performance in positive manner. It implies that increase in any of these variables is likely to increase the performance of the banks. Besides, board size and the audit committee meetings are found to be insignificant in predicting the performance of the banks.
The opinion survey reveals that the current provisions made by central bank regarding the corporate governance are insufficient. The study recommends the banks to improve the level of corporate governance that not only improve the performance of an individual bank but also ensures the stability of banking system. Moreover, banks are suggested to adopt faire corporate governance practices to promote market confidence, attract additional capital through good disclosure and transparency.
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