Bank Ownership, Board Characteristics and Performance: Evidence from Commercial Banks in India
Open Access
- 31 January 2018
- journal article
- research article
- Published by MDPI AG in International Journal of Financial Studies
- Vol. 6 (1), 17
- https://doi.org/10.3390/ijfs6010017
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.Other Versions
This publication has 53 references indexed in Scilit:
- Risk management, corporate governance, and bank performance in the financial crisisJournal of Banking & Finance, 2012
- Bank board structure and performance: Evidence for large bank holding companiesJournal of Financial Intermediation, 2012
- The effects of focus versus diversification on bank performance: Evidence from Chinese banksJournal of Banking & Finance, 2010
- The Role of Boards of Directors in Corporate Governance: A Conceptual Framework and SurveyJournal of Economic Literature, 2010
- Board of directors' size and performance in the banking industryInternational Journal of Managerial Finance, 2009
- Corporate governance in banking: The role of the board of directorsJournal of Banking & Finance, 2008
- A Theory of Friendly BoardsThe Journal of Finance, 2007
- Ferreting out Tunneling: An Application to Indian Business GroupsThe Quarterly Journal of Economics, 2002
- The Non-Correlation Between Board Independence and Long-Term Firm PerformanceSSRN Electronic Journal, 1998
- Firm Performance and Mechanisms to Control Agency Problems between Managers and ShareholdersJournal of Financial and Quantitative Analysis, 1996