Corporate Governance Practices and Non-performing Loans of Banking Sector of Bangladesh: A Panel Data Analysis

Abstract

This paper tries to inspect the association and relationship between corporate governance determinants and level of non-performing loan (NPL) of listed commercial banks in Bangladesh. Recently Banks are facing a problem of default loan. This default loan or NPL may reduce the loan giving capacity of the Banks and it may decrease the economic growth of a country. Moreover, there is less research to find out the implication of good governance on the level of NPL in banking sector of Bangladesh than that of developed countries. Here, data from thirty listed commercial banks for the year 2008-2017 (10 years) are taken to explore the rapport between the corporate governance variables and NPL. Random Effect GLS regression method is used to analyze the data. Findings told that commercial banks follow the code of corporate governance on a comply basis however their relationship with NPL is positively significant within the taken determinants of corporate governance. It is expected that, banks with good quality management may ensure the quality of loan and it will reduce the level of NPL.