CORPORATE GOVERNANCE AND FINANCIAL PERFORMANCE OF COMMERCIAL BANKS LISTED AT THE NSE, KENYA”
Abstract
This study was set out to analyze how corporate governance affect the financial performance of banks traded on Kenya's NSE. The particular goals included looking at the impact of board size, board independence, board gender diversity and the moderating effect of bank size on financial performance, both directly and indirectly, for publicly traded commercial banks. Theories of agency, stakeholder theory and resource dependency served as the basis for this research. Twelve banks traded on the NSE between 2015 and 2021 were selected using a census selection method and analyzed using a descriptive study approach. The study was analyzed with panel regression methods. Diagnostic tools were used along with ethical considerations. According to the results, sound corporate governance has a positive consequence on banks' bottom lines. The results also displayed that a larger and more independent board is associated with better financial results, but a lack of gender diversity on boards has a negative beta value of 0.04. Because of this factor, commercial bank performance appeared to be highly varied. Furthermore, the results showed that the bigger the bank, the better its financial results were. According to the findings, NSE-listed financial institutions would benefit from increasing the size of their board of directors in order to achieve optimal financial performance. Bank management and policymakers should consider the influence of bank size when crafting financial rules to ensure the highest possible level of financial performance for banks. Bankers associations should also create rules to standardize asset quality management practices to maintain the sector's strong performance.
Key words: Board Size, Board Independence, Board Gender Diversity, Bank Size, Nairobi Securities Exchange
CITATION: Mungai J. K., & Wanjohi F. M., (2023). Corporate governance and financial performance of commercial banks listed at the NSE, Kenya. The Strategic Journal of Business & Change Management, 10 (2), 1 – 17.
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DOI: http://dx.doi.org/10.61426/sjbcm.v10i2.2584
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