INVESTIGATING THE RELATIONSHIP BETWEEN CORPORATE GOVERNANCE AND BANKS’ FINANCIAL PERFORMANCE: EGYPT CASE

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Abstract

In the last few decades, policy makers around the world have focused on corporate governance reform since the Asian financial crisis and scandals in the United States such as the Enron debacle. In addition, there is no doubt that banks have significant position in the welfare of any economy. Corporate governance involves in how banks’ businesses and affairs are governed by its board of directors that raises a fundamental question of how this could affect banks’ financial performance. The focus of this research is to investigate the relationships between some of the corporate governance variables that are related to the board of directors on the financial performance of these banks working in the Egyptian market. Thirteen banks that are listed in the Egyptian Stock Exchange were selected with data collected for the period from 2011 till 2013 which is the post Egyptian revolution era. Research analyses adopted in this study are descriptive, correlation and regression analyses to test the research hypotheses. Findings of this research provide evidence that some of these variables such as board independence, foreign board members ratio, women board members ratio and board educational ratio have significant effect on the financial performance of these banks; however, board size and CEO qualities do not have any significant effect on banks’ performance. The research reaches some implications that are important to different stakeholders on practical and academic levels.

Keywords: Corporate Governance, Performance Measurement, Agency Theory, Conventional Banks, Developing Countries, Egypt

How to cite this paper: Youssef, A., Bayoumi, M. (2015). Investigating the relationship between corporate governance and banks’ financial performance: Egypt case. Corporate Ownership & Control, 13(1-10), 1177-1190. https://doi.org/10.22495/cocv13i1c10p5