Corporate Governance Practices in the Banking Sector of Bangladesh: Do They Really Matter?

10 Pages Posted: 12 Jun 2017

See all articles by Samiul Ahmed

Samiul Ahmed

Independent University, Bangladesh (IUB)

Rahatul Jannat

Independent University, Bangladesh

Sarwar Uddin Ahmed

Independent University, Bangladesh (IUB)

Date Written: March 24, 2017

Abstract

A well governed institution is expected to use its resources optimally and, thus, perform more efficiently and contribute positively to economic development of a nation. However, often, it can be seen that poor management of the stakeholders leads to less than optimal strategic directions for an institution. Due to recent global financial crisis and rising issues of the Bangladeshi banking sector, corporate governance is one of the factors that have gained considerable attention. Recent drive of the governance issues of the banking sector of Bangladesh is expected to bring positive change in the financial sector and, hence, it is crucial to assess whether complying with governance codes leads to desired outcome or not. Specifically, the main purpose of this study is to examine the relationship between performances of commercial banks with corporate governance factor along with some internal and macroeconomic variables. Thus, the listed commercial banks in the Dhaka Stock Exchange (DSE) of Bangladesh were considered for the study. Subsequently, considering data availability of the time period (2011-2014), 29 listed commercial banks in the DSE have been considered and, hence, Ordinary Least Squared (OLS) regression models were used through Eviews 8.0 for analyzing the data. Though the study shows a positive relation between corporate governance and performances of banks, the statistical insignificance of the relation raises concern regarding various issues of corporate governance in the financial sector of Bangladesh.

Keywords: corporate governance, financial institutions, performances of commercial banks

JEL Classification: G21, G30, G38, G39, O16

Suggested Citation

Ahmed, Samiul and Jannat, Rahatul and Ahmed, Sarwar Uddin, Corporate Governance Practices in the Banking Sector of Bangladesh: Do They Really Matter? (March 24, 2017). Available at SSRN: https://ssrn.com/abstract=2984104 or http://dx.doi.org/10.2139/ssrn.2984104

Samiul Ahmed (Contact Author)

Independent University, Bangladesh (IUB) ( email )

Plot - 16, Block - B, Aftabuddin Ahmed Road
Bashundhara R/A
Dhaka, 1212
Bangladesh

Rahatul Jannat

Independent University, Bangladesh ( email )

Plot 16 Block B, Aftabuddin Ahmed Road Bashundhara
Bashundhara R/A
Dhaka, 1229
Bangladesh

Sarwar Uddin Ahmed

Independent University, Bangladesh (IUB) ( email )

Plot 16 Block B, Aftabuddin Ahmed Road Bashundhara
Bashundhara R/A
Dhaka, 1229
Bangladesh

HOME PAGE: http://www.sb.iub.edu.bd/

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