Corporate Governance and impact on Bank Performance

Ashenafi Beyene Fanta; Kelifa Srmolo Kemal; Yodit Kassa Waka

doi:doi:10.11648/j.jfa.20130101.12

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Corporate Governance and impact on Bank Performance

Ashenafi Beyene Fanta, Kelifa Srmolo Kemal, Yodit Kassa Waka

Published in Journal of Finance and Accounting (Volume 1, Issue 1)

Received: 27 May 2013 Published: 30 June 2013

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Abstract

This study aims at examining the corporate governance mechanisms and their impact on performance of commercial banks in the absence of organized stock exchange. The study assessed the relationship between selected internal and external corporate governance mechanisms, and bank performance as measured by ROE and ROA. The study used structured review of documents, and commercial banks financial data were collected covering a period 2005 to 2011. The findings indicated that board size and existence of audit committee in the board had statistically significant negative effect on bank performance; whereas bank size had statistically significant positive effect on bank performance. Similarly, capital adequacy ratio, as a measure of external corporate governance mechanism, had statistically significant positive effect on bank performance. In addition, absence of organized stock exchange; high government intervention; lack of corporate governance awareness, absence of national standards of corporate governance, as well as accounting and auditing; and weak legal framework to protect minority shareholder rights are the major factors with adverse impact on corporate governance and bank performance in Ethiopia.

Published in	Journal of Finance and Accounting (Volume 1, Issue 1)
DOI	10.11648/j.jfa.20130101.12
Page(s)	19-26
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2013. Published by Science Publishing Group

Keywords

Ethiopia, Banking sector, Corporate Governance, Bank performance

References

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APA Style

Ashenafi Beyene Fanta, Kelifa Srmolo Kemal, Yodit Kassa Waka. (2013). Corporate Governance and impact on Bank Performance. Journal of Finance and Accounting, 1(1), 19-26. https://doi.org/10.11648/j.jfa.20130101.12

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ACS Style

Ashenafi Beyene Fanta; Kelifa Srmolo Kemal; Yodit Kassa Waka. Corporate Governance and impact on Bank Performance. J. Finance Account. 2013, 1(1), 19-26. doi: 10.11648/j.jfa.20130101.12

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AMA Style

Ashenafi Beyene Fanta, Kelifa Srmolo Kemal, Yodit Kassa Waka. Corporate Governance and impact on Bank Performance. J Finance Account. 2013;1(1):19-26. doi: 10.11648/j.jfa.20130101.12

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@article{10.11648/j.jfa.20130101.12,
  author = {Ashenafi Beyene Fanta and Kelifa Srmolo Kemal and Yodit Kassa Waka},
  title = {Corporate Governance and impact on Bank Performance},
  journal = {Journal of Finance and Accounting},
  volume = {1},
  number = {1},
  pages = {19-26},
  doi = {10.11648/j.jfa.20130101.12},
  url = {https://doi.org/10.11648/j.jfa.20130101.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20130101.12},
  abstract = {This study aims at examining the corporate governance mechanisms and their impact on performance of commercial banks in the absence of organized stock exchange. The study assessed the relationship between selected internal and external corporate governance mechanisms, and bank performance as measured by ROE and ROA. The study used structured review of documents, and commercial banks financial data were collected covering a period 2005 to 2011. The findings indicated that board size and existence of audit committee in the board had statistically significant negative effect on bank performance; whereas bank size had statistically significant positive effect on bank performance. Similarly, capital adequacy ratio, as a measure of external corporate governance mechanism, had statistically significant positive effect on bank performance. In addition, absence of organized stock exchange; high government intervention; lack of corporate governance awareness, absence of national standards of corporate governance, as well as accounting and auditing; and weak legal framework to protect minority shareholder rights are the major factors with adverse impact on corporate governance and bank performance in Ethiopia.},
 year = {2013}
}

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TY  - JOUR
T1  - Corporate Governance and impact on Bank Performance
AU  - Ashenafi Beyene Fanta
AU  - Kelifa Srmolo Kemal
AU  - Yodit Kassa Waka
Y1  - 2013/06/30
PY  - 2013
N1  - https://doi.org/10.11648/j.jfa.20130101.12
DO  - 10.11648/j.jfa.20130101.12
T2  - Journal of Finance and Accounting
JF  - Journal of Finance and Accounting
JO  - Journal of Finance and Accounting
SP  - 19
EP  - 26
PB  - Science Publishing Group
SN  - 2330-7323
UR  - https://doi.org/10.11648/j.jfa.20130101.12
AB  - This study aims at examining the corporate governance mechanisms and their impact on performance of commercial banks in the absence of organized stock exchange. The study assessed the relationship between selected internal and external corporate governance mechanisms, and bank performance as measured by ROE and ROA. The study used structured review of documents, and commercial banks financial data were collected covering a period 2005 to 2011. The findings indicated that board size and existence of audit committee in the board had statistically significant negative effect on bank performance; whereas bank size had statistically significant positive effect on bank performance. Similarly, capital adequacy ratio, as a measure of external corporate governance mechanism, had statistically significant positive effect on bank performance. In addition, absence of organized stock exchange; high government intervention; lack of corporate governance awareness, absence of national standards of corporate governance, as well as accounting and auditing; and weak legal framework to protect minority shareholder rights are the major factors with adverse impact on corporate governance and bank performance in Ethiopia.
VL  - 1
IS  - 1
ER  -

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Author Information

Ashenafi Beyene Fanta

Department of Public Financial Management, ECSU, Addis Ababa, Ethiopia
Kelifa Srmolo Kemal

Department of Accounting and Finance, AAU, Addis Ababa, Ethiopia
Yodit Kassa Waka

Department of Accounting and Finance, AAU, Addis Ababa, Ethiopia

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APA Style

Ashenafi Beyene Fanta, Kelifa Srmolo Kemal, Yodit Kassa Waka. (2013). Corporate Governance and impact on Bank Performance. Journal of Finance and Accounting, 1(1), 19-26. https://doi.org/10.11648/j.jfa.20130101.12

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ACS Style

Ashenafi Beyene Fanta; Kelifa Srmolo Kemal; Yodit Kassa Waka. Corporate Governance and impact on Bank Performance. J. Finance Account. 2013, 1(1), 19-26. doi: 10.11648/j.jfa.20130101.12

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AMA Style

Ashenafi Beyene Fanta, Kelifa Srmolo Kemal, Yodit Kassa Waka. Corporate Governance and impact on Bank Performance. J Finance Account. 2013;1(1):19-26. doi: 10.11648/j.jfa.20130101.12

Copy | Download

@article{10.11648/j.jfa.20130101.12,
  author = {Ashenafi Beyene Fanta and Kelifa Srmolo Kemal and Yodit Kassa Waka},
  title = {Corporate Governance and impact on Bank Performance},
  journal = {Journal of Finance and Accounting},
  volume = {1},
  number = {1},
  pages = {19-26},
  doi = {10.11648/j.jfa.20130101.12},
  url = {https://doi.org/10.11648/j.jfa.20130101.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20130101.12},
  abstract = {This study aims at examining the corporate governance mechanisms and their impact on performance of commercial banks in the absence of organized stock exchange. The study assessed the relationship between selected internal and external corporate governance mechanisms, and bank performance as measured by ROE and ROA. The study used structured review of documents, and commercial banks financial data were collected covering a period 2005 to 2011. The findings indicated that board size and existence of audit committee in the board had statistically significant negative effect on bank performance; whereas bank size had statistically significant positive effect on bank performance. Similarly, capital adequacy ratio, as a measure of external corporate governance mechanism, had statistically significant positive effect on bank performance. In addition, absence of organized stock exchange; high government intervention; lack of corporate governance awareness, absence of national standards of corporate governance, as well as accounting and auditing; and weak legal framework to protect minority shareholder rights are the major factors with adverse impact on corporate governance and bank performance in Ethiopia.},
 year = {2013}
}

Copy | Download

TY  - JOUR
T1  - Corporate Governance and impact on Bank Performance
AU  - Ashenafi Beyene Fanta
AU  - Kelifa Srmolo Kemal
AU  - Yodit Kassa Waka
Y1  - 2013/06/30
PY  - 2013
N1  - https://doi.org/10.11648/j.jfa.20130101.12
DO  - 10.11648/j.jfa.20130101.12
T2  - Journal of Finance and Accounting
JF  - Journal of Finance and Accounting
JO  - Journal of Finance and Accounting
SP  - 19
EP  - 26
PB  - Science Publishing Group
SN  - 2330-7323
UR  - https://doi.org/10.11648/j.jfa.20130101.12
AB  - This study aims at examining the corporate governance mechanisms and their impact on performance of commercial banks in the absence of organized stock exchange. The study assessed the relationship between selected internal and external corporate governance mechanisms, and bank performance as measured by ROE and ROA. The study used structured review of documents, and commercial banks financial data were collected covering a period 2005 to 2011. The findings indicated that board size and existence of audit committee in the board had statistically significant negative effect on bank performance; whereas bank size had statistically significant positive effect on bank performance. Similarly, capital adequacy ratio, as a measure of external corporate governance mechanism, had statistically significant positive effect on bank performance. In addition, absence of organized stock exchange; high government intervention; lack of corporate governance awareness, absence of national standards of corporate governance, as well as accounting and auditing; and weak legal framework to protect minority shareholder rights are the major factors with adverse impact on corporate governance and bank performance in Ethiopia.
VL  - 1
IS  - 1
ER  -

Copy | Download