Bank sustainability: Do corporate governance and internal audit quality matter?

Abstract

This study investigates the nexus between corporate governance, internal audit quality, and the sustainability of banks within in a developing country context. This study adopts a quantitative explanatory research design to analyze a panel dataset comprising 15 Ghanaian banks over the period 2007 to 2021. An ordered probit regression model is employed to identify the key determinants of bank sustainability.The results demonstrate that corporate governance attributes—specifically board size, board expertise, and the extent of corporate governance disclosures—significantly influence bank sustainability. Furthermore, internal audit quality, assessed through audit experience, internal audit presence, and audit function size, emerges as a critical determinant of sustainability outcomes. Control variables such as bank size, age, and affiliation with Big Four auditing firms enhance the robustness of the model. The findings underscore the imperative of strengthening governance structures and internal audit mechanisms to ensure long-term financial sustainability. This research contributes to the accounting and finance literature by offering empirical insights relevant to emerging markets, and provides actionable implications for regulators, policymakers, and financial institutions aiming to align governance frameworks with strategic sustainability objectives.