CORPORATE GOVERNANCE AND PERFORMANCE OF NEPALESE COMMERCIAL BANKS

Abstract

This study investigates the corporate governance and financ ial performance of Nepalese commercial banks, focusing on the relationships between governance factors and performance metrics. Using both descriptive and causal comparative research designs, the study analyzes data from three banks Global IME Bank Ltd (GI BL), Nabil Bank Ltd (NABIL), and Agriculture Development Bank Ltd ( selected through convenience sampling. The data spans ten fiscal years (2069/70 to 2078/79), primarily sourced from annual reports and supplemented by other publications. The study's conceptual framework examines key corporate governance variables, such as board size, independent directors, credit deposit ratio (CDR), bank size, earnings per share (EPS), and the presence of women on the board, while focusing on Return on Assets (ROA) a nd Return on Equity (ROE) as indicators of bank performance. Data analysis is conducted using the Statistical Package for the Social Sciences (SPSS) program, applying descriptive statistics, correlation analysis, and multiple regression models to explore r elationships between corporate governance factors and financial performance. The results reveal that bank size, EPS, and CDR are significant predictors of financial performance, with EPS having a strong positive impact on both ROA and ROE, while larger ban k size tends to correlate with inefficiencies. Governance factors such as board size and the presence of independent directors show limited impact on the financial performance metrics, indicating the need for deeper exploration of governance practices in t he banking sector. The findings underscore the importance of profitability and efficiency in driving the financial performance of Nepalese banks. While GIBL, NABIL, and ADBL all experienced asset growth, profitability varied, with NABIL leading in EPS and ROE, while ADBL struggled with declining ROE. The study highlights the complexities of governance and performance in the banking sector, suggesting that further research is needed to address the operational and strategic challenges influencing profitabilit y and efficiency.