EFFECT OF CORPORATE GOVERNANCE ON FINANCIAL PERFORMANCE OF NEPALESE COMMERCIAL BANKS

Abstract

Corporate governance appeared to be the global issue and global trend in most of the commercial industries of public concern than ever before. This study attempts to investigate the relationship between financial performance and corporate governance of commercial banks in Nepal. Specifically, it examines the effects of board size, company age, male board of directors, female board of directors, number of audit committee meeting and number of board committee meeting on return on equity and return on assets. This study is based on secondary data collected from the annual reports of 10 commercial banks of Nepal. Samples for this study were taken from 100 observations in the review period from fiscal year 2070/071 to 2079/080 B.S. The study finds out that the board size and male board of directors and company age positively impacts the financial performance of commercial banks in Nepal whereas female board of directors, number of audit committee meeting and number of board committee meeting negatively impact the financial performance of commercial banks in Nepal. The research utilizes quantitative methods to analyze data gathered from financial reports and governance disclosures of Nepalese commercial banks. Findings aim to contribute to the existing literature by providing empirical evidence on the relationship between corporate governance practices and financial outcomes in the context of Nepalese banking. Understanding these dynamics can offer insights into enhancing corporate governance frameworks to improve financial performance and sustainability in the banking sector of Nepal.