Bank Specific Traits and Board Governance: An Investigation of Indian Banks

Abstract

The purpose of the study is to examine the board structure-related corporate governance practices and then compare those practices to various bank-specific characteristics. The intent is to determine whether there is any difference in board structure across distinct bank-specific characteristics. The study has used parametric test i.e. independent sample t test and ANOVA test to analysis the difference in board structure with respect to bank specific characteristics that include ownership and bank age, bank size, asset quality, ROA and loan to deposit ratio on 40 commercial banks over the sample period of 2001–2019. The study findings indicated significant difference in governance practices based on bank-specific characteristics. Except for bank age, all bank-specific factors induce a significant difference in board size. In addition, all bank-specific factors cause a significant difference in other directorships except total assets. All other corporate governance factors such as board independence, gender diversity, board meetings, board committees and director diligence differ significantly on the basis of all bank specific characteristics. Overall, the authors’ findings add fresh and significant insights to the banking literature. The findings also have ramifications for investors and academic researchers, emphasising areas that require significant attention in corporate governance with regard to bank-specific issues.

Keywords: Corporate Governance, Bank Specific Characteristic, Board Structure, ROA, Public Sector Banks, and Private Sector Banks

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