The Effect of Corporate Governance Mechanisms on Banks Performance Using GLS: The Case From Kenya

Özet

Purpose - This study examines the effect of corporate governance mechanisms on bank performance of Kenya commercial banks. Design/Methodology/Approach - For examining the aim of this research the empirical research was conducted on Kenya Commercial Banks. The data of this study was collected from the annual reports of each bank. The sample used in the analysis was sixteen commercial banks covering the period 2010- 2019. Corporate governance variables are represented by board size, NEDs, number of committees, number of board meetings, and the size of audit committees, while performance was measured using ROA and ROE. The collected data was analyzed using STATAMP13 to test the suggested hypotheses. The three least square 3SLS and generalized least square were used to analyze the obtained data. Findings - The result revealed that NEDs, NBM, and leverage has a negative and significant impact on banks performance, while NC and total asset has a positive significant impact. On the other hand board, size and SAC have a negative and insignificant impact on bank performance. Discussion - Most of the previous studies evaluated the relationships between two or three variables with conflicting and inconsistent results and acknowledgment of its importance in companies, the subject has not received much attention in Kenya and has not been actively debated and that, Kenya have experienced the lack of effective corporate governance practices. This study investigate the corporate governance mechanisms on banking performance from the new perspective measurement.