Skip to main content
SpringerLink
Log in

The effect of corporate governance on bank performance: evidence from Turkish and some MENA countries banks

  • Original Article
  • Published:
Journal of Asset Management Aims and scope Submit manuscript

Abstract

This paper examines the relationship between the structure of corporate governance and performance in the banking sector. A sample has been selected using the generalized method of moment (GMM) approach. The sample consists of data from a total of 33 Turkish, Tunisia, Morocco and Lebanon banks which are listed in stock during the period between 2012 and 2017. Since this paper emphasizes corporate governance, a “Board Characteristics Index” was developed based upon four different aspects of the board composition—board leadership structure, board member characteristics and board committee structure. It also demonstrates how the overall index relates to banking performance. The results show that the governance index, which aggregates with the four sets of board attributes relate significantly and positively with return on assets.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  • Abobakr, M.G., and K. Elgiziry. 2017. The relationship between board of directors’ characteristics and bank risk-taking: evidence from egyptian banking sector. Journal of Finance and Accounting 5 (1): 24–33.

    Article  Google Scholar 

  • Akbulut, H., and C.G. Mehmet. 2015. The relationship between public transfer payments and growth: a long run analysis with dynamic panel data method. Hacettepe University Journal of Economics and Administrative Sciences isi 33 (1): 1–18.

    Google Scholar 

  • Akdogan, Y.E., and M.A. Boyacioglu. 2014. The effect of corporate governance on firm performance: a case of Turkey. International Journal of Critical Accounting 6 (2): 187–210.

    Article  Google Scholar 

  • Akwaa-Sekyi, E.K., and J.M. Gené. 2016. Effect of internal controls on credit risk among listed Spanish banks. Intangible Capital 12 (1): 357–389.

    Article  Google Scholar 

  • AlHares, A., G. Dominic, and R. Al Abed. 2019. The corporate governance practices: evidence from MENA countries. Theoretical Economics Letters 9 (04): 999.

    Article  Google Scholar 

  • Aras, G. 2015. Sustainable markets for sustainable business: a global perspective for business and financial markets. Farnham, Surrey; Burlington VT: Gower.

  • Aras, G., N. Tezcan, O. KutluFurtuna, and E. Hacioglu Kazak. 2017. Corporate sustainability measurement based on entropy weight and TOPSIS: a Turkish banking case study. Meditari Accountancy Research 25 (3): 391–413.

    Article  Google Scholar 

  • Arouri, M.E.H., J. Jouini, and D.K. Nguyen. 2011. Volatility spillovers between oil prices and stock sector returns: Implications for portfolio management. Journal of International Money and Finance 30 (7): 1387–1405.

    Article  Google Scholar 

  • Assenga, M.P., D. Aly, and K. Hussainey. 2018. The impact of board characteristics on the financial performance of Tanzanian firms. Corporate Governance: The International Journal of Business in Society 18 (6): 1089–1106.

    Article  Google Scholar 

  • Aytekin, M., and A.R. Sönmez. 2016. Impact of corporate practises on business performance. Journal of Turkish Social Sciences Research 1 (2): 32–41.

    Google Scholar 

  • BAT, The Banks Association of Turkey https://www.tbb.org.tr/en/home

  • Battaglia, F., and A. Gallo. 2017. Strong boards, ownership concentration and EU banks’ systemic risk-taking: evidence from the financial crisis. Journal of International Financial Markets, Institutions and Money 46: 128–146.

    Article  Google Scholar 

  • Béjaoui, R., and H. Bouzgarrou. 2014. Determinants of Tunisian bank profitability. The International Journal of Business and Finance Research 8 (4): 121–131.

    Google Scholar 

  • Bektaş, E., and T. Kaymak. 2009. Governance mechanisms and ownership in an emerging market: the case of Turkish banks. Emerging Markets Finance and Trade 45: 20–32.

    Article  Google Scholar 

  • Bhagat, S., and B.S. Black. 2002. The non-correlation between board independence and long-term firm performance. Journal of Corporation Law 27: 231–273.

    Google Scholar 

  • Bonn, Ingrid, Toru Yoshikawa, and Phillip H. Phan. 2004. Effects of board structure on firm performance: a comparison between Japan and Australia. Asian Business and Management 3 (1): 105–125.

    Article  Google Scholar 

  • Boussaada, R., and D. Labaronne. 2015. Ownership concentration, board structure and credit risk: the case of MENA banks. Bankers, Markets and Investors ESKA Publishing 139: 5–18.

    Google Scholar 

  • Bouteska, A. 2020. Do board characteristics affect bank performance? Evidence from the Eurozone. Journal of Asset Management 21 (6): 535–548.

    Article  Google Scholar 

  • Buallay, A. 2019. Corporate governance, Sharia’ah governance and performance. International Journal of Islamic and Middle Eastern Finance and Management 12 (2): 216–235.

    Article  Google Scholar 

  • Deryol, A. 2018. Türk Bankalarinin Özkaynak Maliyeti. Türkiye Cumhuriyet Merkez Bankası. Bankacılık ve Finansal Kuruluşlar Genel Müdürlüğü. Specialization Proficiency Thesis.

  • Doğan, B., and İH. Ekşi. 2020. The effect of board of directors characteristics on risk and bank performance: evidence from Turkey. Economics and Business Review 6 (3): 88–104.

    Article  Google Scholar 

  • El Gammal, W., A.N. El-Kassar, and L.C. Messarra. 2018. Corporate ethics, governance and social responsibility in MENA countries. Management Decision 56 (1): 273–291.

    Article  Google Scholar 

  • Erkens, D.H., M. Hung, and P. Matos. 2012. Corporate governance in the 2007–2008 financial crisis: evidence from financial institutions worldwide. Journal of Corporate Finance 18 (2): 389–411.

    Article  Google Scholar 

  • Ersoy, E., A. Bayrakdaroglu, and F. Samiloglu. 2011. The analysis of the relationship between corporate governance and firm performance (Tobin-q and Abnormal Return) in Turkey. FinansPolitik and EkonomikYorumlar 48: 71–83.

    Google Scholar 

  • Fernandes, C., J. Farinha, F.V. Martins, and C. Mateus. 2017. Supervisory boards, financial crisis and bank performance: do board characteristics matter?. Journal of Banking Regulation 18 (4): 310–337.

    Article  Google Scholar 

  • Fidanoski, F., V. Mateska, and K. Simeonovski. 2014. Corporate governance and bank performance: evidence from Macedonia. Economic Analysis 47 (1–2): 76–99.

    Google Scholar 

  • Gafoor, C.A., V. Mariappan, and S. Thyagarajan. 2018. Board characteristics and bank performance in India. IIMB Management Review 30 (2): 160–167.

    Article  Google Scholar 

  • Ghosh, S. 2017. Corporate governance reforms and bank performance: evidence from the Middle East and North Africa. Corporate Governance: The International Journal of Business in Society 17 (5): 822–844.

    Article  Google Scholar 

  • Ghosh, S., and J. Ansari. 2018. Board characteristics and financial performance: evidence from Indian cooperative banks. Journal of Co-operative Organization and Management 6 (2): 86–93.

    Article  Google Scholar 

  • Gümüş, K.G., Y. Gümüş, and I. Altunal. 2017. The relationship between corporate governance and financial performance in banking sector: Turkey and Kazakhstan Case. Kastamonu University Journal of Faculty of Economics and Administrative Sciences 16 (2): 104–121.

    Google Scholar 

  • Hajer, C., and J. Anis. 2018. Analysis of the impact of governance on bank performance: case of commercial Tunisian Banks. Journal of the Knowledge Economy 9 (3): 871–895.

    Article  Google Scholar 

  • Hakimi, I.; Zeinaddini, M.; and Abdolreza, S. 2016. Studying the role of corporate social responsibility in corporate performance with emphasis on mediator variables of competitive advantage, corporate reputation and customer satisfaction. Case study: food industry of Amol Township. International Journal of Humanities and Cultural Studies 2263-2278.

  • Hakimi, A., H. Rachdi, R. Ben Selma Mokni, and H. Hssini. 2018. Do board characteristics affect bank performance? Evidence from the Bahrain Islamic banks. Journal of Islamic Accounting and Business Research 9 (2): 251–272.

    Article  Google Scholar 

  • Jesover, F., and G. Kirkpatrick. 2005. The revised OECD principles of corporate governance and their relevance to non-OECD countries. Corporate Governance: An International Review 13 (2): 127–136.

    Article  Google Scholar 

  • Kapucu, H. 2012. Portföy Modelleme. IJOPEC Publications.

  • Kara, E., D.A. Erdur, and L. Karabıyık. 2015. Effects of corporate governance level on the financial performance of companies: a research on BIST corporate governance index (XKURY). EgeAkademic Review 15 (2): 265–274.

    Google Scholar 

  • Karpoff, J.M., and G. Rankine. 1994. In search of a signaling effect: the wealth effects of corporate name changes. Journal of Banking and Finance 18 (6): 1027–1045.

    Article  Google Scholar 

  • Khalid, A. M., and Hanif, M. N. 2005. Corporate governance for banks in Pakistan: recent developments and regional comparisons. CMER Working Paper 05-42.

  • Khosa, A. 2017. Independent directors and firm value of group affiliated firms. International Journal of Accounting and Information Management 25 (2): 217–236.

    Article  Google Scholar 

  • Lehmann, E., and J. Weigand. 2000. Does the governed corporation perform better? Governance structures and corporate performance in Germany. Review of Finance 4 (2): 157–195.

    Article  Google Scholar 

  • Liang, Q., P. Xu, and P. Jiraporn. 2013. Board characteristics and Chinese bank performance. Journal of Banking and Finance 37: 2953–2968.

    Article  Google Scholar 

  • Mathew, S., S. Ibrahim, and S. Archbold. 2017. Corporate governance and firm risk. Corporate Governance International Journal of Business in Society 18 (2): 52–67.

    Google Scholar 

  • Mnasri, K. 2015. Ownership structure, board structure and performance in Tunisian banking industry. Asian Academy of Management Journal of Accounting and Finance 11 (2): 57–82.

    Google Scholar 

  • Moussa, A.A. 2018. The impact of working capital management on firms’ performance and value: evidence from Egypt. Journal of Asset Management 19: 259–273.

    Article  Google Scholar 

  • Needles, B.E., A. Turel, E.D. Sengur, and A. Turel. 2012. Corporate governance in Turkey: issues and practices of high-performance companies. Accounting and Management Information Systems 11 (4): 510–531.

    Google Scholar 

  • Nomran, N.M., R. Haron, and R. Hassan. 2018. Shari’ah supervisory board characteristics effects on Islamic banks’ performance: evidence from Malaysia. International Journal of Bank Marketing 36 (2): 290–304.

    Article  Google Scholar 

  • O’Sullivan, J., A. Mamun, and M.K. Hassan. 2016. The relationship between board characteristics and performance of bank holding companies: before and during the financial crisis. Journal of Economics and Finance 40 (3): 438–471.

    Article  Google Scholar 

  • Orazalin, N., M. Mahmood, and K. Jung Lee. 2016. Corporate governance, financial crises and bank performance: lessons from top Russian banks. Corporate Governance: The International Journal of Business in Society 16 (5): 798–814.

    Article  Google Scholar 

  • Owino, B., and D.L. Kivoi. 2016. Corporate governance and bank performance: a case of Kenya’s banking sector. Journal of Research in Humanities and Social Science 1 (1): 33–46.

    Google Scholar 

  • Özsöz, E., Gurarda, S., and Ates, A. 2014. Ownership structure and corporate governance in the case of Turkey. Munich Personal RePEc Archive 58293.

  • Parlakkaya, R., and Demirci, M. N. 2017. The relationship between corporate governance and performance in the participation of banks operating in Turkey. International Periodical for the Languages Literature and History of Turkish or Turkic 12(35).

  • Pathan, S. 2009. Strong boards, CEO power and bank risk-taking. Journal of Banking and Finance 33 (7): 1340–1350.

    Article  Google Scholar 

  • Pathan, S., M. Skully, and J. Wickramanayake. 2007. Board size, independence and performance: an analysis of Thai banks. Asia-Pacific Financial Markets 14 (3): 211–227.

    Article  Google Scholar 

  • Peng, B., ŞK. Özdemir, M. Liertzer, W. Chen, J. Kramer, H. Yılmaz, and L. Yang. 2016. Chiral modes and directional lasing at exceptional points. Proceedings of the National Academy of Sciences 113 (25): 6845–6850.

    Article  Google Scholar 

  • Sarkar, J., and S. Sarkar. 2018. Bank ownership, board characteristics and performance: evidence from commercial banks in India. International Journal of Financial Studies 6 (17): 1–17.

    Google Scholar 

  • Sheikh, N.A.S., and Z. Wang. 2012. Effects of corporate governance on capital structure: empirical evidence from Pakistan. Corporate governance. The International Journal of Business in Society 12 (5): 629–641.

    Google Scholar 

  • Stepanova, A., and Ivantsova, O. 2012. Role of corporate governance in banking sector: evidence from all over the world. Journal of Corporate Finance Research/КopпopaтивныeФинaнcы| 6(4): 80-86.

  • Suryanto, T., and I.E. Thalassinos. 2017. Cultural ethics and consequences in whistle-blowing among professional accountants: an empirical analysis. Journal of Applied Economic Sciences 6 (52): 1725–1731.

    Google Scholar 

  • Tarchouna, A., B. Jarraya, and A. Bouri. 2017. How to explain non-performing loans by many corporate governance variables simultaneously? A corporate governance index is built to US commercial banks. Research in International Business and Finance 42: 645–657.

    Article  Google Scholar 

  • Titova, Y. 2016. Are board characteristics relevant for banking efficiency? Evidence from the US. Corporate Governance 16 (4): 655–679.

    Article  Google Scholar 

  • Tosuni, G. 2013. The impact of corporate governance on the performance of financial institutions (Doctoral dissertation, Staffordshire University).

  • Ünlü, U., Yalçın, N. and Yağlı, İ. 2017. Corporate governance and firm performance: an application on BIST 30 firms with topsis method. 19(1): 63-81.

  • Vafeas, N., and E. Theodorou. 1998. The relationship between board structure and firm performance in the UK. The British Accounting Review 30 (4): 383–407.

    Article  Google Scholar 

  • Wahba, H. 2014. Capital structure, managerial ownership and firm performance: evidence from Egypt. Journal of Management and Governance, Springer; AccademiaItaliana di EconomiaAziendale (AIDEA) 18(4): 1041-1061.

  • Zhou, H., S. OwusuAnsah, and A. Maggina. 2018. Board of directors, audit committee, and firm performance: evidence from Greece. Journal of International Accounting, Auditing and Taxation 31: 20–36.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Faculty of Economics and Administrative Sciences, Gaziantep University, Gaziantep, Turkey

    Berna Doğan Başar, Burak Büyükoğlu & İbrahim Halil Ekşi

  2. Faculty of Economics and Management of Tunis, Tunis el Manar University, Rommana, Tunisia

    Ahmed Bouteska

Authors
  1. Berna Doğan Başar
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Ahmed Bouteska
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Burak Büyükoğlu
    View author publications

    You can also search for this author in PubMed Google Scholar

  4. İbrahim Halil Ekşi
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Berna Doğan Başar.

Additional information

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Başar, B.D., Bouteska, A., Büyükoğlu, B. et al. The effect of corporate governance on bank performance: evidence from Turkish and some MENA countries banks. J Asset Manag 22, 153–162 (2021). https://doi.org/10.1057/s41260-021-00223-3

Download citation

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1057/s41260-021-00223-3

Keywords

Search

Navigation