Impact of Corporate Governance on Bank’s Performance: A Case Study of Pakistan’s Banking Sector

Abstract

Purpose: The purpose of this study to examine association between Corporate Governance mechanism and Bank’s performance.

Design/Methodology: A panel data from 08 Commercial Banks of Pakistan has been taken as a sample size from 2018 to 2024. The required secondary data has been obtained from the published audited financials of the Banks. For examination of the hypothesis a Fixed Effect Regression Model (FEM) was selected based on the results of Variance Inflation Factors (VIF). A Descriptive Statistics has also been performed in this study, which provides the concise overview of dataset including measurement of central tendency.

Findings: By employing Fixed Effect Model, statistical evidence was found indicating that BOD size and BOD Independency have positive significant effect on Bank’s performance & Bank Size as a control variable which has been measured by log of total assets of the banks, has also strong positive significant impact on Bank’s performance. However, an independent variable which is BOD meetings has no significant impact on Bank performance as P-value of this variable is greater than 0.05

Research Limitations: This research has certain limitations as the study’s results may not be generalized to other countries or industries because the current study considered only the Pakistani Bank sample size based on the availability of data. Moreover, this study may not represent the whole financial industry because it includes all listed and non-listed banks. Hence, the findings may not be applicable to the other industries operating in different business ecosystems.