TITLE:
Corporate Governance, Risk Management, and Bank Performance: Does Type of Ownership Matter?
AUTHORS:
Shayan Khan Kakar, Javed Ali, Muhammad Bilal, Yasmeen Tahira, Muhammad Tahir, Naeem Bahadar, Hina Bukhari, Sana Ullah, Tahir Aziz
KEYWORDS:
Corporate Governance, Bank Performance, Risk Management and Ownership Matter
JOURNAL NAME:
Journal of Financial Risk Management,
Vol.10 No.3,
September
26,
2021
ABSTRACT: This research explains the
correlation between corporate governance, risk management, bank performance, and ownership structure. The research has used a
set of independent variables related to revelation and precision. The data from
39 banks working in Pakistan have been used for the time period of 2010 to 2015. Two variables are used for risk
management including VAR (Value At Risk) and CAR (Capital Adequacy Ratio).
Family ownership, managerial ownership, and ownership concentration are used as
instrumental variables for ownership structure. Board independence, the board
size, CEO, and audit committee are used as proxy variables for corporate governance,
whereas, dummy variables are used for bank performance. The results indicate
that three types of bank ownerships are the same; therefore, they cannot affect
VAR type of bank ownership and compare as a whole with risk management. The
regression consequences display that family ownership has an unconstructive outcome on VAR and CAR that show a
negative association between the
variables. While managerial ownership and concentration ownership show a
positive association between VAR and CAR. The results indicate that board size and audit committee has a negative effect on
VAR and CAR that means there is a negative
relationship between the variables, whereas board size and CEO have a positive relationship with VAR and CAR.
Firm size, firm profitability, and growth opportunities represent a variety of bank
performance. The results reveal that firm size, firm profitability and growth
opportunities have a positive effect on CAR and VAR. The results also indicate
that corporate governance has a positive effect on bank performance that means
if a bank can adopt good corporate governance rules, the performance will be
excellent. The result emphasizes that risk management has a positive correlation
with bank performance that means if a bank manages risk, the performance of
that bank will be increased. But in Pakistan, the rules and regulations are the
same for all types of banks including private, public, and foreign, therefore, the ownership structures of all banks are
the same.