Skip to main content
Top

2019 | OriginalPaper | Chapter

20. The Impact of Corporate Governance on Efficiency of Nepalese Commercial Banks

Authors : Radhe S. Pradhan, Mukesh Kumar Shah, Nabin Bhandari, Nagendra Prasad Mahato, Namaraj Adhikari, Nirajan Bam

Published in: Business Governance and Society

Publisher: Springer International Publishing

Activate our intelligent search to find suitable subject content or patents.

search-config
loading …

Abstract

This study examines the impact of corporate governance variables on non-performing loans of Nepalese commercial banks. The dependent variables are ratio of non-performing loan and cost efficiency. The independent variables are board size, independent directors, audit committee member, foreign ownership, domestic ownership, CEO duality, bank age, female director, board meeting and bank size. This study is based on secondary sources of data collected from 18 Nepalese commercial banks from 2010–2011 to 2015–2016, leading to 108 observations. The data were collected from annual reports and websites of the selected Nepalese commercial banks. The regression models are estimated to test the significance and impact of corporate governance variables on non-performing loans of Nepalese commercial banks.

Dont have a licence yet? Then find out more about our products and how to get one now:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

  • über 102.000 Bücher
  • über 537 Zeitschriften

aus folgenden Fachgebieten:

  • Automobil + Motoren
  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Elektrotechnik + Elektronik
  • Energie + Nachhaltigkeit
  • Finance + Banking
  • Management + Führung
  • Marketing + Vertrieb
  • Maschinenbau + Werkstoffe
  • Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

  • über 67.000 Bücher
  • über 340 Zeitschriften

aus folgenden Fachgebieten:

  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Finance + Banking
  • Management + Führung
  • Marketing + Vertrieb
  • Versicherung + Risiko




Jetzt Wissensvorsprung sichern!

Literature
go back to reference Adams, R. B., & Funk, P. C. (2012). Is corporate governance different for bank holding companies? Economic Policy Review, 9(1), 123–142. Adams, R. B., & Funk, P. C. (2012). Is corporate governance different for bank holding companies? Economic Policy Review, 9(1), 123–142.
go back to reference Al-Smadi, M. O. (2013). Examining the relationship between corporate governance and banks’ performance, and risk in Saudi Arabia. European Journal of Economics, Finance and Administrative Sciences, 16(2), 59–62. Al-Smadi, M. O. (2013). Examining the relationship between corporate governance and banks’ performance, and risk in Saudi Arabia. European Journal of Economics, Finance and Administrative Sciences, 16(2), 59–62.
go back to reference Ammar, A., Hanna, A. S., Nordheim, E. V., & Russell, J. S. (2003). Indicator variables model of firm’s size-profitability relationship of electrical contractors using financial and economic data. Journal of Construction Engineering and Management, 129(2), 192–197.CrossRef Ammar, A., Hanna, A. S., Nordheim, E. V., & Russell, J. S. (2003). Indicator variables model of firm’s size-profitability relationship of electrical contractors using financial and economic data. Journal of Construction Engineering and Management, 129(2), 192–197.CrossRef
go back to reference Balina, R. (2017). Does the gender of a bank’s president have an effect on financial performance? A case study of Poland’s cooperative bank sector. Journal of Corporate Responsibility and Leadership, 3(2), 9–22.CrossRef Balina, R. (2017). Does the gender of a bank’s president have an effect on financial performance? A case study of Poland’s cooperative bank sector. Journal of Corporate Responsibility and Leadership, 3(2), 9–22.CrossRef
go back to reference Barth, J. R., Dopico, L. G., Nolle, D. E., & Wilcox, J. A. (2002). Bank safety and soundness and the structure of bank supervision: A cross-country analysis. International Review of Finance, 3(4), 163–188.CrossRef Barth, J. R., Dopico, L. G., Nolle, D. E., & Wilcox, J. A. (2002). Bank safety and soundness and the structure of bank supervision: A cross-country analysis. International Review of Finance, 3(4), 163–188.CrossRef
go back to reference Bonin, D., & Wheeler, J. V. (2005). Bank performance, efficiency and ownership in transition countries. Journal of Banking & Finance, 19(1), 31–53.CrossRef Bonin, D., & Wheeler, J. V. (2005). Bank performance, efficiency and ownership in transition countries. Journal of Banking & Finance, 19(1), 31–53.CrossRef
go back to reference Boubakri, N., Cosset, J. C., & Guedhami, O. (2005). Post privatization corporate governance: The role of ownership structure and investor protection. Journal of Financial Economics, 76(2), 369–399.CrossRef Boubakri, N., Cosset, J. C., & Guedhami, O. (2005). Post privatization corporate governance: The role of ownership structure and investor protection. Journal of Financial Economics, 76(2), 369–399.CrossRef
go back to reference Brealey, R. A., & Kaplanis, E. C. (1996). The determination of foreign banking location. Journal of International Money and Finance, 15(4), 77–97.CrossRef Brealey, R. A., & Kaplanis, E. C. (1996). The determination of foreign banking location. Journal of International Money and Finance, 15(4), 77–97.CrossRef
go back to reference Bussoli, G., & Marisa, B. T. (2015). The impact of corporate governance on banks performance and loan quality: Evidence from Italian cooperative banks. Chinese Business Review, 14(8), 390–401. Bussoli, G., & Marisa, B. T. (2015). The impact of corporate governance on banks performance and loan quality: Evidence from Italian cooperative banks. Chinese Business Review, 14(8), 390–401.
go back to reference Chen, Y. Y., & Michael, N. Y. (2009). Cross-border mergers and acquisitions by Chinese listed companies: A principal–principal perspective. Asia Pacific Journal of Management, 27(3), 523–539.CrossRef Chen, Y. Y., & Michael, N. Y. (2009). Cross-border mergers and acquisitions by Chinese listed companies: A principal–principal perspective. Asia Pacific Journal of Management, 27(3), 523–539.CrossRef
go back to reference Crespi-Cladera, R., & Gispert, C. (2003). Total board compensation, governance and performance of Spanish listed companies. Labour, 17(1), 103–126.CrossRef Crespi-Cladera, R., & Gispert, C. (2003). Total board compensation, governance and performance of Spanish listed companies. Labour, 17(1), 103–126.CrossRef
go back to reference Daily, C. M., & Dalton, D. R. (1993). Board of directors’ leadership and structure: Control and performance implications. Entrepreneurship: Theory and Practice, 17(3), 65–82. Daily, C. M., & Dalton, D. R. (1993). Board of directors’ leadership and structure: Control and performance implications. Entrepreneurship: Theory and Practice, 17(3), 65–82.
go back to reference Donaldson, T., & Preston, L. E. (1995). The stakeholder theory of the corporation: Concepts, evidence, and implications. Academy of Management Review, 20(1), 65–91.CrossRef Donaldson, T., & Preston, L. E. (1995). The stakeholder theory of the corporation: Concepts, evidence, and implications. Academy of Management Review, 20(1), 65–91.CrossRef
go back to reference El-Chaarani, H. (2014). The impact of corporate governance on the performance of Lebanese banks. The International Journal of Business and Finance Research, 8(5), 35–46. El-Chaarani, H. (2014). The impact of corporate governance on the performance of Lebanese banks. The International Journal of Business and Finance Research, 8(5), 35–46.
go back to reference Ghabayen, M. A. (2012). Board characteristics and firm performance: Case of Saudi Arabia. International Journal of Accounting and Financial Reporting, 2(2), 168–178.CrossRef Ghabayen, M. A. (2012). Board characteristics and firm performance: Case of Saudi Arabia. International Journal of Accounting and Financial Reporting, 2(2), 168–178.CrossRef
go back to reference Gorg, H., & Greenaway, D. (2004). Much ado about nothing? Do domestic firms really benefit from foreign direct investment? The World Bank Research Observer, 19(2), 171–197.CrossRef Gorg, H., & Greenaway, D. (2004). Much ado about nothing? Do domestic firms really benefit from foreign direct investment? The World Bank Research Observer, 19(2), 171–197.CrossRef
go back to reference Hauner, D. (2005). Explaining efficiency differences among large German and Austrian banks. Applied Economics, 37(9), 969–980.CrossRef Hauner, D. (2005). Explaining efficiency differences among large German and Austrian banks. Applied Economics, 37(9), 969–980.CrossRef
go back to reference Ibarra, H. (1992). Homophile and differential returns: Sex differences in network structure and access in an advertising firm. Administrative Science Quarterly, 24(8), 422–447.CrossRef Ibarra, H. (1992). Homophile and differential returns: Sex differences in network structure and access in an advertising firm. Administrative Science Quarterly, 24(8), 422–447.CrossRef
go back to reference Ikram, A., Su, Q., Ijaz, F., & Fiaz, M. (2016). Determinants of non-performing loans: An empirical investigation of bank-specific microeconomic factors. Journal of Applied Business Research, 32(6), 1723–1736.CrossRef Ikram, A., Su, Q., Ijaz, F., & Fiaz, M. (2016). Determinants of non-performing loans: An empirical investigation of bank-specific microeconomic factors. Journal of Applied Business Research, 32(6), 1723–1736.CrossRef
go back to reference Jensen, M. C. (1993). The modern industrial revolution, exit, and the failure of internal control systems. Journal of Finance, 48(3), 31–80.CrossRef Jensen, M. C. (1993). The modern industrial revolution, exit, and the failure of internal control systems. Journal of Finance, 48(3), 31–80.CrossRef
go back to reference Jensen, M. C. (2001). Value maximization, stakeholder theory, and the corporate objective function. Journal of Applied Corporate Finance, 14(3), 8–21.CrossRef Jensen, M. C. (2001). Value maximization, stakeholder theory, and the corporate objective function. Journal of Applied Corporate Finance, 14(3), 8–21.CrossRef
go back to reference Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360.CrossRef Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360.CrossRef
go back to reference Jensen, M. C., & Ruback, R. S. (1983). The market for corporate control: The scientific evidence. Journal of Financial Economics, 11(1–4), 5–50.CrossRef Jensen, M. C., & Ruback, R. S. (1983). The market for corporate control: The scientific evidence. Journal of Financial Economics, 11(1–4), 5–50.CrossRef
go back to reference Klein, A. (2002). Audit committee, board of director characteristics, and earnings management. Journal of Accounting and Economics, 33(3), 375–400.CrossRef Klein, A. (2002). Audit committee, board of director characteristics, and earnings management. Journal of Accounting and Economics, 33(3), 375–400.CrossRef
go back to reference La Porta, R., Lopez-de-Silanes, F., & Zamarripa, G. (2003). Related lending. The Quarterly Journal of Economics, 118(1), 231–268.CrossRef La Porta, R., Lopez-de-Silanes, F., & Zamarripa, G. (2003). Related lending. The Quarterly Journal of Economics, 118(1), 231–268.CrossRef
go back to reference Lai, P. F., & Choi, O. N. (2014). Corporate governance and financial performance of bank in Asian regions and recommendations. Asian Journal of Finance & Accounting, 6(2), 377–406.CrossRef Lai, P. F., & Choi, O. N. (2014). Corporate governance and financial performance of bank in Asian regions and recommendations. Asian Journal of Finance & Accounting, 6(2), 377–406.CrossRef
go back to reference Lensink, R., & Hermes, N. (2004). The short-term effects of foreign bank entry on domestic bank behavior: Does economic development matter? Journal of Banking & Finance, 28(3), 553–568.CrossRef Lensink, R., & Hermes, N. (2004). The short-term effects of foreign bank entry on domestic bank behavior: Does economic development matter? Journal of Banking & Finance, 28(3), 553–568.CrossRef
go back to reference Lipton, M., & Lorsch, J. W. (1992). A modest proposal for improved corporate governance. The Business Lawyer, 22(8), 59–77. Lipton, M., & Lorsch, J. W. (1992). A modest proposal for improved corporate governance. The Business Lawyer, 22(8), 59–77.
go back to reference Marimuthu, M. (2008). Ethnic diversity on boards of directors and its implications on firm financial performance. Journal of International Social Research, 1(4), 44–56. Marimuthu, M. (2008). Ethnic diversity on boards of directors and its implications on firm financial performance. Journal of International Social Research, 1(4), 44–56.
go back to reference Pasiouras, F., Sifodaskalakis, E., & Zopounidis, C. (2007). Estimating and analyzing the cost efficiency of Greek cooperative banks: An application of two-stage data envelopment analysis. University of Bath Working Paper, 2(3), 3–15. Pasiouras, F., Sifodaskalakis, E., & Zopounidis, C. (2007). Estimating and analyzing the cost efficiency of Greek cooperative banks: An application of two-stage data envelopment analysis. University of Bath Working Paper, 2(3), 3–15.
go back to reference Pincus, K., Rusbarsky, M., & Wong, J. (1989). Voluntary formation of corporate audit committees among NASDAQ firms. Journal of Accounting and Public Policy, 8(4), 239–265.CrossRef Pincus, K., Rusbarsky, M., & Wong, J. (1989). Voluntary formation of corporate audit committees among NASDAQ firms. Journal of Accounting and Public Policy, 8(4), 239–265.CrossRef
go back to reference Poudel, R. P., & Hovey, M. (2013). Corporate governance and efficiency in Nepalese commercial banks. International Review of Business Research Papers, 9(4), 53–64. Poudel, R. P., & Hovey, M. (2013). Corporate governance and efficiency in Nepalese commercial banks. International Review of Business Research Papers, 9(4), 53–64.
go back to reference Shleifer, A., & Vishny, R. W. (1997). A survey of corporate governance. The Journal of Finance, 52(2), 737–783.CrossRef Shleifer, A., & Vishny, R. W. (1997). A survey of corporate governance. The Journal of Finance, 52(2), 737–783.CrossRef
go back to reference Simpson, W. G., & Gleason, A. E. (1999). Board structure, ownership, and financial distress in banking firms. International Review of Economics and Finance, 8(4), 281–292.CrossRef Simpson, W. G., & Gleason, A. E. (1999). Board structure, ownership, and financial distress in banking firms. International Review of Economics and Finance, 8(4), 281–292.CrossRef
go back to reference Tornyeva, K., & Wereko, T. (2012). Corporate governance and firm performance: Evidence from the insurance. European Journal of Business and Management, 4(13), 95–112. Tornyeva, K., & Wereko, T. (2012). Corporate governance and firm performance: Evidence from the insurance. European Journal of Business and Management, 4(13), 95–112.
go back to reference Virtanen, A. (2012). Women on the boards of listed companies: Evidence from Finland. Journal of Management and Governance, 16(4), 571–593.CrossRef Virtanen, A. (2012). Women on the boards of listed companies: Evidence from Finland. Journal of Management and Governance, 16(4), 571–593.CrossRef
go back to reference Wanyama, D. W., & Olweny, T. (2013). Effects of corporate governance on financial performance of listed insurance firms in Kenya. Public policy and Administration Research, 3(4), 96–120. Wanyama, D. W., & Olweny, T. (2013). Effects of corporate governance on financial performance of listed insurance firms in Kenya. Public policy and Administration Research, 3(4), 96–120.
go back to reference Yermack, D. (1996). Higher market valuation of companies with a small board of directors. Journal of Financial Economics, 40(2), 185–211.CrossRef Yermack, D. (1996). Higher market valuation of companies with a small board of directors. Journal of Financial Economics, 40(2), 185–211.CrossRef
go back to reference Yoshikawa, T., & Phan, P. H. (2003). The performance implications of ownership-driven governance reform. European Management Journal, 21(6), 698–706.CrossRef Yoshikawa, T., & Phan, P. H. (2003). The performance implications of ownership-driven governance reform. European Management Journal, 21(6), 698–706.CrossRef
go back to reference Zahra, S. A., & Pearce, J. A. (1989). Boards of directors and corporate financial performance: A review and integrative model. Journal of Management, 15(2), 291–334.CrossRef Zahra, S. A., & Pearce, J. A. (1989). Boards of directors and corporate financial performance: A review and integrative model. Journal of Management, 15(2), 291–334.CrossRef
Metadata
Title
The Impact of Corporate Governance on Efficiency of Nepalese Commercial Banks
Authors
Radhe S. Pradhan
Mukesh Kumar Shah
Nabin Bhandari
Nagendra Prasad Mahato
Namaraj Adhikari
Nirajan Bam
Copyright Year
2019
Publisher
Springer International Publishing
DOI
https://doi.org/10.1007/978-3-319-94613-9_20