Corporate governance practices and capital structure of Nepalese Commercial Banks

Abstract

This study investigates the relationship between corporate governance and leverage in Nepalese commercial banks, utilizing bivariate Pearson correlation coefficients and regression models to analyze the impact of go vernance factors on financial decision making processes. Drawing from existing finance theories, the research examines various governance variables, including board size, CEO duality, presence of outside directors, bank size, and profitability. Findings su ggest a diverse landscape of governance structures within the banking sector, with CEO duality emerging as a significant predictor positively associated with leverage. However, other governance factors such as board size and profitability do not demonstrat e statistically significant relationships with leverage, highlighting potential nuances in the relationship. The study underscores the importance of further research to comprehend the complexities of capital structure decisions in Nepalese commercial banks and emphasizes the need for effective governance practices to promote transparency and accountability in the banking sector. These findings offer valuable insights for policymakers and industry stakeholders seeking to enhance governance frameworks and fos ter financial resilience in Nepal's banking industry.