Effect of Gender Diversity in the Board of Directors on Financial Performance of Commercial Bank: A Panel Econometric Approach

In most developing countries, several cases of collapses or failure in the banking sector were witnessed. Nigeria had witnessed several cases and collapsed in the banking sector. This study investigated the effects of corporate governance on the financial performance of commercial banks in Nigeria. The study used the survey research design. A secondary source of data was used for this research. The data were collected from financial statements of the five (5) commercial banks selected from the Nigerian Stock Exchange listing for fourteen financial years (2003 – 2017). The study utilized the panel Least Squares Regression Analysis as the method. The result indicated that board size had significant effects on financial performance (ROA) of commercial banks in Nigeria, board composition had significant effects on financial performance (ROA) of commercial banks in Nigeria, board gender diversity had significant effects on financial performance (ROA) of commercial banks in Nigeria, the audit committee has no significant effects on financial performance (ROA) of commercial banks in Nigeria, and board independence had significant effects on financial performance (ROA) of commercial banks in Nigeria. The study, therefore, concludes that the weak corporate governance structure in Nigeria contributed immensely to the recent crisis experienced in the Nigerian banking sector. The study recommended that banks develop and implement strategic training for board members and senior bank managers. Nigerian banks should appropriately adopt the international codes of corporate governance to meet the need of the Nigerian environment, among other recommendations.

This paper examines the impact of agent banking activities, a recent FinTech development, on the financial performance of commercial banks in Bangladesh, as agent banking has been receiving significant global attention due to its technology driven approach, cost-effective and easy accessibility and broader coverage to the unbanked population. Employing a panel data regression framework, the study estimates a random effect model using the bank-level quarterly data from nine commercial banks in Bangladesh that have been operating full-scale agent banking services including deposit mobilization and credit disbursement over the period from 2018Q1 to 2024Q4. The empirical findings indicate that credit disbursement by agent banks has a positive and statistically significant impact on bank profitability measures, return on asset (ROA) and return on equity (ROE). Similarly, the number of agent banking outlets has a significant positive impact on ROA. Therefore, an appropriate agent banking policy aimed at increasing agent banking outlets using digital platforms based on FinTech is vital for ensuring positive growth in credit disbursement in order to improve the financial performance of the banking sector in a developing country like Bangladesh.

The purpose of this study was to investigate the relationship between the growth of mobile banking and the financial performance of Bangladeshi commercial banks. The focus of the study was to clarify the mobile banking tactics used by commercial banks, evaluate their present financial situation, and identify how mobile banking impact their economic performance. The research design for the study was a descriptive survey. A census of all 13 of the commercial banks registered at Bangladesh Bank was conducted. The Central Bank of Bangladesh’s bulletins and financial statements covering the years 2018 through 2023 provided secondary data for the study. Using the statistical software for the social sciences (SPSS) version 26, descriptive statistics including mean, standard deviation, maximum, and minimum were utilized to examine the data and identify important patterns and sample features. After that, correlation analysis and a multiple regression model were used to evaluate the connections between the parameters. The study comes to the conclusion that the quantity of transactions and the number of mobile banking users have grown to be significant factors in the financial performance of Bangladesh’s commercial banks. Nevertheless, the quantity of transactions has no significant impact on the commercial bank’s financial standing in Bangladesh. The study leads to the execution that, despite a number of obstacles that must be overcome by cooperation amongst stakeholders, mobile banking is essential to improving the financial performance of commercial banks in Bangladesh.

This study tries to determine the impact of Corporate Governance (CG) on the performance of Commercial Banks (CB) in Bangladesh. Data are collected from different banks listed under DSE for the period starting from 2015 to 2020. For analyzing the data and testing hypothesis Pearson’s correlation and OLS regression models are used to assess the relationship among the performance of the banks and CG related predictor variables like Board Size (BS), Board Independence (BI), Audit Committee (AC), Risk Management Committee (RMC), and some control variables like Firm Age (FA), Firm Size (FS) and Market Capitalization (MC). The regression analysis results showed a mixed result. The BS and BI are significantly affirmatively related with ROE and positively correlated with ROA. The BS is affirmatively related with Tobin’s Q, but BI is significantly negatively related. No significant positive connection is found between the AC, RMC and ROE, ROA. The RMC is significant affirmatively related with Tobin’s Q, but no significant association between the AC and Tobin’s Q. The theoretical part of this paper has focused about a brief discussion about different variables related with Corporate Governance. The empirical part is based on a survey made on twenty commercial banks listed with DSE.

Performance of private commercial banks (PCBs) in Bangladesh depends on some internal and external factors such as bank size, risk management, overhead cost, capital, ownership of the bank, interest rate spread, bank expenses, inflation, central bank interest rate, GDP, taxation, variables that represents market characteristics (e.g. market concentration, industry size and ownership status etc) on the performance of the bank. This paper uses a multi-criteria, performance based index to rank 27 PCBs operating in Bangladesh. Total profit (TP), return on asset (ROA), return on equity (ROE), and labor productivity (LP) for the year ended 2012 have been considered as pillars of the performance based index. After construction of performance index the hypothesis that there is a relationship between bank performance and bank size is tested through regression analysis. It is found that there is significant positive correlation between bank size and their performance.

Financial performance of commercial banks in the post-reform era: Further evidence from Bangladesh

Banking industry plays a very important role to the economy of Bangladesh and the financial performance measurement is one of the major considering factors for the banks. The study attempts to analyses and compares the financial performance of Islamic and Conventional commercial banks operating in Bangladesh during 2011 to 2015 using secondary data by applying CAMEL model and other relevant statistical tools. The study revealed that Islamic banks perform better than Conventional banks in terms of capital adequacy, assets quality, and management quality and earnings ability. However, Islamic banks had a weaker liquidity position in comparison to Conventional banks. This study also found that, there is no significant difference between the two banking categories except liquidity position. This study also revealed that under Islamic banking system Al-Arafah Islamic Bank and Exim Bank Limited performed better than other Islamic banks and under Conventional banking system Mercantile Bank Limited and Dutch-Bangla Bank Limited performed better than other conventional banks among the selected banks in the selected time period. The findings of the study will help to increase the confidence and consciousness in the partaking banks in Bangladesh. Finally, some suggestions and recommendations have been provided to increase financial performance of selected banks which will insure those banks sound positioning in banking sector of Bangladesh.

Since banks mobilize financial resources across the economy, they are expected to be critical in bringing about financial stability and economic progress. The purpose of this research was to determine the impact of macroeconomic variables on the financial performance of commercial banks in Bangladesh. From the World Bank website, secondary data were gathered for the fiscal years 2010 through 2021. Correlation, multiple linear regression, factor analysis, and model selection criteria were utilized for this study. From the correlation analysis, it was observed that the inflation rate was significantly and positively correlated with the financial performance of commercial banks in Bangladesh. From the multiple linear regression analysis, it was seen that import, exchange rate, and inflation rates have a substantial impact on Bangladesh's commercial banks' financial performance. From the factor analysis, it was observed that GDP and imports are highly correlated with Bangladesh's commercial banks' financial performance. Based on the model selection criteria, it was discovered that the model including all variables is the best. The government, other researchers, bank managers, possible investors, financial experts, and anybody else involved in Bangladesh's banking sector should all take note of the findings.

This study looks at mechanisms for improving and stabilising the financial performance of commercial banks in Tanzania. More specifically, this study aimed to assess corporate governance’s influence on financial performance regarding asset quality, efficiency use of equity, earning ability, capital adequacy, and liquidity. The study included the board aspect of governance and board control, constructs which have not been studied previously in assessing the influence of corporate governance on the performance of commercial banks. Other constructs included are the board’s gender diversity, board size, directors’ shareholding, board control, board members’ over boarding, board activities, and the existence of important board committees. Panel data were collected from published reports of 15 commercial banks covering a period of 17 and employing multiple linear regression analysis to establish causal-effect relationships among the study variables. The findings revealed that corporate governance (board aspects of governance, board members over-boarding) positively influences the financial performance of commercial banks in terms of their earning ability, asset quality, and capital adequacy. Corporate governance also negatively influences the efficient use of equity and liquidity through board gender diversity, board aspects of governance, and board control. The study recommends that corporate governance principles and mechanisms be enhanced to improve the financial performance of commercial banks.

Institutions are managed by board of directors who have delegated authority from the owners of the firm to enhance corporate governance. Board of directors manage the firms on behalf of the owners. Despite control measures being instituted by CBK as a regulator Kenyans have witnessed 40 commercial banks collapsing in the past. Most recent was 2015 and 2016 where three commercial banks collapsed with a combined asset valuation of Kshs 187.9 Billion. This caused panic in the sector. Eliciting examination of the influence of board gender diversity on financial performance of commercial banks in Kenya. The target population was 43 commercial banks in operation in Kenya as at 31st December 2017. The study collected secondary data on board gender diversity as independent variable and return on equity as a dependent variable from 34 commercial banks for the years 2008 to 2017. Panel data was collected from the internet and perusal of the annual accounts of the individual commercial banks. The study adopted causal research design. Data was analysed using both descriptive and inferential statistics. For descriptive statistics: mean, standard deviation, coefficient of variation was used to indicate the nature of both independent variable and dependent variable. For inferential statistics fixed effect regression model was adopted. Using STATA Version 13 to analyse data, the study revealed that board gender diversity had a negative but significant influence on return on equity across peer and across banks. However, in regard to time, board gender diversity had insignificant influence on return on equity across time. In regard to individual years, board gender diversity had a positive and significant variability on return on equity across time, across peer and across banks. This imply that board gender diversity had generally a negative influence on return on equity across time, across peer and across banks. Whereas, in regard to individual years, peer and bank, board gender diversity had a positive and significant variability on return on equity across time, across peer and across banks. Based on the analysis, the study concluded that board gender diversity had a negative but significant influence on return on equity on commercial banks in Kenya. The study recommended a board gender diversity to be embraced by commercial banks since as their increased presence might bring some positive influence in financial performance especially in small banks where currently some banks have not embraced board gender diversity. CBK Act stipulate that commercial banks diversify their boards.

Purpose: The main purpose of the study is to investigate the effect of non-performing loan ratio (NPLR), loan to deposit ratio (LDR), interest income to loan and advance ratio (ILAR), and capital adequacy ratio (CAR) on the return on assets (ROA) of commercial banks in Nepal. Methods: The balance panel data of eighteen commercial banks based on data availability with 180 observations covering 2013/14 to 2022/23 have been used for analysis. Descriptive methods used to summarize data, correlation method used to examine relationships between variables, and the random effect regression model used to predict outcomes and assesses variable influence. Results: The results show that the NPLR and LDR have a negative and significant effect on the financial performance (ROA) of commercial banks in Nepal. ILAR has a positive and insignificant effect and CAR has a positive and significant effect on the financial performance (ROA) of commercial banks in Nepal. Conclusion: Banks should focus on reducing non-performing loan ratio, loan supply to the productive sector, and maintaining an optimal level of capital adequacy ratio to improve their financial performance.

Purpose The purpose of this paper is to investigate whether audit committee characteristics, in particular audit committee size, audit committee activity and audit committee gender diversity, are associated with financial performance in Egyptian banks. The second purpose of this paper is to explore the moderating role of board gender diversity on the relationship between audit committee characteristics and financial performance. Design/methodology/approach A multiple regression analysis is used to estimate the moderating role of board gender diversity on the relationship between audit committee characteristics and financial performance of a sample of Egyptian banks during the period between 2018 and 2022. Findings The results indicate that audit committee size has a negative and insignificant effect impact on return on assets (ROA) and return on equity (ROE), respectively. The results also indicate that the audit committee gender diversity has a significant positive impact on ROA and ROE, respectively. Regarding audit committee activity, the number of board meetings has a negative and insignificant effect on ROA and ROE, respectively. Regarding gender diversity as a moderating variable, in general there is a positive effect of gender diversity on the relationship between audit committee characteristics and financial performance. Research limitations/implications The study was limited to 20 banks in one country, but it sets the tone for future empirical research on this subject matter. The study also relied on one moderating variable, which is board gender diversity. This study provides an avenue for future research in the area of corporate governance and financial performance in other emerging countries, especially other African countries. Practical implications This study provides useful insights for managers and policymakers to better understand which audit committee characteristics can best encourage a company to improve financial performance. Furthermore, regulators should ensure that banks strictly adhere to corporate governance principles to build a strong banking industry capable of achieving economic development. Social implications Banks will benefit equally from valuable qualities across demographic groupings in society by having females on the audit committee and appropriate audit committee meetings. Additionally, if audit committee members are correctly selected, banks with more females in audit committee and suitable audit committee meetings can successfully contribute to strengthening financial performance and social welfare of diverse segments of society. A culture of good banking governance must emerge to improve bank financial stability and, as a result, greater stability and economic growth. Originality/value To the best of the authors’ knowledge, the study is, perhaps, the first to examine the moderating role of board gender diversity on the relationship between audit committee characteristics and financial performance in Egyptian banks. This study adds to the literature by investigating such an issue in a developing economy that operates in a different context than those in developed countries.

This study acknowledges the correlation between risk-taking behavior and the gender composition of the board members. To arrive at this epilogue, a selection of 21 private commercial banks in Bangladesh has been chosen as a representative sample for the period spanning from 2013 to 2022. The firm risk is evaluated from the standard deviation or volatility of daily stock returns, which is the dependent variable of the article. The gender diversity in the board has been incorporated as the independent variable. The study has also controlled for the size of the board, the level of leverage, the age of the bank, the capital intensity of the bank, the financial performance, the tangibility of the bank, and the GDP growth rate as well. Employing the fixed effect panel regression analysis, this study demonstrates a unique and notable positive association between the degree of gender diversity on the directors’ board and the inclination to engage in behavior involving risk in the banking industry of Bangladesh. The age of the firm, the financial performance, and the tangibility of the firm are also found to positively influence the firm risk. The firm risk is found to be negatively correlated with board size and the intensity of capital. This study provides evidence that the presence of gender diversity on corporate directors’ boards has a considerable consequence on business risk within the private banking industry in Bangladesh.

Mobile financial services are financial services offered through mobile devices. This study ascertained whether mobile financial services make any significant differentiation in the financial performance of commercial banks in Bangladesh. This study was conducted on 29 commercial banks of Bangladesh with financial data from 2016, 2017 and 2018 fiscal years. To test the hypotheses, the independent sample t-test was used. This study concluded that the interest expense to interest income ratios, investment income to investment assets ratio, net interest margin, liquid assets as opposed to loan return on assets, return on earning assets, and return on equity were significantly better in banks offering mobile financial services. However, net profit margin, interest yields, loan (gross) to total deposit ratio of banks did not significantly contrast between banks with and without mobile financial services. Banks with mobile financial services significantly improve efficiency, liquidity, and profitability-based performance when compared with banks without similar services.

Mobile financial services are financial services offered through mobile devices. This study ascertained whether mobile financial services make any significant differentiation in the financial performance of commercial banks in Bangladesh. This study was conducted on 29 commercial banks of Bangladesh with financial data from 2016, 2017 and 2018 fiscal years. To test the hypotheses, the independent sample t-test was used. This study concluded that the interest expense to interest income ratios, investment income to investment assets ratio, net interest margin, liquid assets as opposed to loan return on assets, return on earning assets, and return on equity were significantly better in banks offering mobile financial services. However, net profit margin, interest yields, loan (gross) to total deposit ratio of banks did not significantly contrast between banks with and without mobile financial services. Banks with mobile financial services significantly improve efficiency, liquidity, and profitability-based performance when compared with banks without similar services.