Corporate governance and bank performance in the sub-Saharan African emerging economy.

Regulatory bodies impact corporate governance in the banking sector, with directors making critical strategic decisions. The effectiveness of these regulations and corporate governance has a substantial impact on the performance of banks. Furthermore, corporate governance standards are critical in establishing and sustaining public trust in the banking sector, as poor governance can have serious negative macroeconomic effects. This study adds to the ongoing discussion by investigating the association between board governance and bank financial performance for a sample of Sub-Saharan African (SSA) banks. It also investigates the moderation effect of regulatory quality on such associations. Adopting panel data techniques, the study analyses balanced panel data from sixty banks in ten chosen Sub-Saharan African countries covering 15 years. The selected corporate governance measures include board size, board gender diversity, board independence, number of audit committee meetings and the proportion of foreign members on the board. Meanwhile, return on assets (ROA) and composite CAMELS indices were selected/created to measure bank financial performance respectively. Common-effect (CE) estimator, fixed-effect estimator (FE) and random-effect estimator (RE) were employed for the empirical analysis. The study reveals that board size and gender diversity are adverse determinants of return on assets in selected SSA banks, while audit committee meetings improve financial performance. The inclusion of foreign members on the board has no significant impact. Board independence had the highest positive impact count, while board size had the highest negative count. Country-level governance plays no significant role in the overall banking system, but interaction with corporate governance measures significantly impacts return on assets. Zambia had the largest number of significant corporate governance measures, while Tanzania had the least. Zimbabwe had the highest number of significant relationships between country-level governance and corporate governance, while Nigeria and Mauritius had no significant effects. Zambia, Tanzania, South Africa, Ghana, Kenya, Malawi, and Uganda had few causal effects. Corporate governance and bank performance; moderation effect of regulatory quality on corporate governance and bank performance topics are well grounded in literature with evidence from developed countries. However, research in developing countries is relatively limited, particularly in the SSA region. This study adds to the literature by presenting multi-country empirical evidence within the SSAs. Balanced (without missing data) data from 2008 to 2022 has been collected/analysed, which covers the latest data in SSAs. In addition, no prior research has examined the impact of corporate governance mechanisms on bank performance in the SSA region using the innovatively created CAMELS Index. To the best of the author's knowledge, the research is the first study to apply this approach to multi-country samples.

Author dc:creator

• Saka, Ayotunde Qudus

Advisor dc:contributor.advisor

• X. Zhang and O. Hassan

• Sub-Saharan African banks
• Corporate governance
• Bank performance
• Return on assets
• Composite CAMELS indices
• Gender diversity
• Board size
• Common-effect estimator
• Fixed-effect estimator
• Random-effect estimator

Language dc:language

en

Identifier

oai:rgu-repository.worktribe.com:3020779
https://doi.org/10.48526/rgu-wt-3020779

Author Identifier

0000-0002-9454-4601

OAI identifier oai:identifier

oai:rgu-repository.worktribe.com:3020779