Impact of Corporate Governance on Non- Performing Loans of Commercial Banks in Bangladesh

[vc_row][vc_column width=”1/4″][vc_single_image image=”11825″ img_size=”684×1000″][/vc_column][vc_column width=”3/4″ css=”.vc_custom_1710951744328{margin-top: -50px !important;background-color: #f6f6f6 !important;}”][thim-heading title=”Impact of Corporate Governance on Non- Performing Loans of Commercial Banks in Bangladesh” title_uppercase=”” size=”h4″ title_custom=”custom” font_weight=”” clone_title=”” line=””][vc_row_inner][vc_column_inner width=”1/2″][vc_column_text]Raad Mozib Lalon
Professor, Department of Banking and Insurance, University of Dhaka
Email: raadmozib@du.ac.bd
Shehab Sujaet
Research officer, Centennial Research Grant Project, University of Dhaka[/vc_column_text][/vc_column_inner][vc_column_inner width=”1/2″][vc_column_text]Journal of Banking & Financial Services
Volume 15 Number 1 (June) & 2 (December) 2023
DOI : https://doi.org/10.57143/JBFSV15A1
Published online: 30 May, 2024
Published in Print: 02 June, 2024[/vc_column_text][/vc_column_inner][/vc_row_inner][vc_column_text]

The paper investigates the nexus between corporate governance and the levels of non-performing loans (NPL) of commercial banks in Bangladesh based on the sample of 10 private commercial banks for 10 years covering from 2012 to 2021. A number of econometric models such as pooled OLS, fixed effect, random effect, cross-sectional GLS, and one- step system GMM approach were employed in our analyses. From the observed estimated coefficients, the availing of credit rating from the three renowned credit rating agencies had a significant negative impact on non-performing loans under pooled OLS, GLS, and random effect. Board size had a significant negative relationship under GLS while bank size had a significant positive influence. Institutional ownership had a significant negative influence and government ownership had a significant positive influence under the fixed effect model. From the estimated coefficients observed from the one-step system GMM, only director’s ownership is significantly lessening non-performing loans, while board meetings and stock-exchange listed banks had a significant positive impact. All other coefficient values under the one- step GMM estimation except for government ownership and employment of big four affiliated auditors as external auditor was found to adhere to our hypothesized impact

[/vc_column_text][vc_column_text]Keywords:
Corporate Governance, Board Size, Ownership, Credit Rating, NPL[/vc_column_text][vc_btn title=”View Full Articles” style=”gradient” align=”left” link=”url:https%3A%2F%2Fbanins.du.ac.bd%2Fwp-content%2Fuploads%2F2024%2F06%2F1-Impact-of-Corporate-Governance-on-Non-converted.pdf|target:_blank”][/vc_column][/vc_row]