Impact of Corporate Governance on Financial Performance of banking companies: A Study on Selected Public Sector Banks in India

Abstract

Introduction corporate governance describes the procedures, policies, relationships and methods through which boards of directors, managers, shareholders, and other stakeholders oversee and run businesses. Objectives This study examines ways to stabilize and enhance the financial performance of India's commercial public sector banks. More precisely, this study sought to evaluate how corporate governance affected financial performance in terms of operating efficiency, asset quality and equity utilization efficiency. Methods Board-specific governance system characteristics and industry-specific performance are included in this analysis. Additional characteristics covered include the gender diversity of the board, its composition, risk assessment, board control, and the presence of significant board committees. To determine the causal-effect relationship between the research variables, a multiple linear regression technique is used, the data from annual reports of the top 5 commercial public sector banks over a ten-years period. Results The results showed that performance indicator i.e. operating profit, return on assets and return on equity have no impact on corporate governance system in banking industry. Conclusion The present guidelines/ governance practices for banking management have not significance relationship with performance of sample banks. The suitable guideline and mandatory framework should be revised/ implemented for enhancement of financial performance of banking sectors.