Corporate Governance and Financial Performance of Bank in Asian Regions and Recommendations

Ping-fu Lai, On-na CHOI

Abstract


This research analyzes the bank’s corporate governance with financial performance relationship in Asian regions. As we know, corporate governance helps to promote prosperity, financial performance and economic growth. In this research, we use multiple linear regression analysis and correlation matrix to explain the effect of explanatory variable; namely, Capital (CAR), Profitability (PTC and ROAA), Asset Size (TA) and Asset Quality (NPL) on a proxy variable which are the Corporate Governance (CG), Board Size (BS) and Board Meeting (BM). Findings are that there is statistically significant relationship between CAR, PTC and corporate governance. TA, NPL, ROAA are not statistically significant relationship between corporate governance. There is also statistically significant relationship between CAR, PTC and board size. TA, NPL and ROAA are not statistically significant relationship between board sizes. Besides, there is showed statistically significant relationship between PTC, TA, ROAA and board meeting. CAR and NPL are not statistically significant relationship between board meetings. Additionally, this study also finds that financial performance of banks in Year 2007-2008 (financial crisis) is statistically different from that of Year 2011-2012. Since banks faced slowdown in the US economy and financial crisis in Year 2007-2008. It shows that PTC and ROAA are no statistically significant difference. CAR, TA and NPL are statistically significant difference. The methods of banks use to improve corporate governance and financial performance via strengthen internal control and ensure compliance is important. It can help management to respond risk quickly and achievement of objectives.


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DOI: https://doi.org/10.5296/ajfa.v6i2.6429

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