Effects of politically controlled boards on bank loan performance: an emerging economy perspective

IF 3.2 Q1 BUSINESS, FINANCE
Mohammed Mohi Uddin, M. T. Islam, Omar Al Farooque
{"title":"Effects of politically controlled boards on bank loan performance: an emerging economy perspective","authors":"Mohammed Mohi Uddin, M. T. Islam, Omar Al Farooque","doi":"10.1108/jaee-11-2021-0353","DOIUrl":null,"url":null,"abstract":"PurposeIn this study, the authors explore the effects of politically controlled boards on bank loan performance in both state-owned commercial banks (SCBs) and private sector commercial banks (PCBs) in Bangladesh.Design/methodology/approachThe data consist of 409 bank-year observations from 46 sample SCBs and PCBs of Bangladesh for the period 2008–17. The authors apply ordinary least squares pooled regression with year fixed effect for baseline econometric analyses and generalized method of moments regression for robustness tests after addressing the endogeneity issue.FindingsThe regression results reveal that the presence of bank “boards controlled by politically affiliated directors” (PA) have significant positive effects on non-performing loans (NPLs). Similarly, the presence of “boards controlled by politically affiliated directors without substantial ownership interests” (PAWOI) show positive association with NPLs. In contrast, the presence of “boards controlled by politically affiliated directors with substantial ownership interests” (PAOI) exhibit an inverse relationship with NPLs. These findings support ‘agency conflict’ arguments and document that both PA and PAWOI are detrimental to bank loan performance in Bangladesh, while PAOI do not have significant effect on increasing NPLs.Originality/valueThis study contributes to the existing bank governance literature by providing evidence from an emerging economy perspective, where politically affiliated directors (PADs) exploit their positions for personal and/or political gain at the cost of other stakeholders by taking advantage of relaxed regulatory oversights and investor protections.","PeriodicalId":45702,"journal":{"name":"Journal of Accounting in Emerging Economies","volume":null,"pages":null},"PeriodicalIF":3.2000,"publicationDate":"2022-08-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"2","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Journal of Accounting in Emerging Economies","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.1108/jaee-11-2021-0353","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 2

Abstract

PurposeIn this study, the authors explore the effects of politically controlled boards on bank loan performance in both state-owned commercial banks (SCBs) and private sector commercial banks (PCBs) in Bangladesh.Design/methodology/approachThe data consist of 409 bank-year observations from 46 sample SCBs and PCBs of Bangladesh for the period 2008–17. The authors apply ordinary least squares pooled regression with year fixed effect for baseline econometric analyses and generalized method of moments regression for robustness tests after addressing the endogeneity issue.FindingsThe regression results reveal that the presence of bank “boards controlled by politically affiliated directors” (PA) have significant positive effects on non-performing loans (NPLs). Similarly, the presence of “boards controlled by politically affiliated directors without substantial ownership interests” (PAWOI) show positive association with NPLs. In contrast, the presence of “boards controlled by politically affiliated directors with substantial ownership interests” (PAOI) exhibit an inverse relationship with NPLs. These findings support ‘agency conflict’ arguments and document that both PA and PAWOI are detrimental to bank loan performance in Bangladesh, while PAOI do not have significant effect on increasing NPLs.Originality/valueThis study contributes to the existing bank governance literature by providing evidence from an emerging economy perspective, where politically affiliated directors (PADs) exploit their positions for personal and/or political gain at the cost of other stakeholders by taking advantage of relaxed regulatory oversights and investor protections.
政治控制董事会对银行贷款绩效的影响:一个新兴经济体的视角
在本研究中,作者探讨了政治控制的董事会对孟加拉国国有商业银行(SCBs)和私营商业银行(pcb)的银行贷款绩效的影响。设计/方法/方法数据包括2008-17年期间孟加拉国46个样本SCBs和pcb的409个银行年度观察结果。在解决了内生性问题后,采用带年固定效应的普通最小二乘合并回归进行基线计量分析,采用广义矩回归方法进行稳健性检验。回归结果显示,银行“政治关联董事控制的董事会”(PA)的存在对不良贷款(NPLs)有显著的正向影响。同样,“无实质性所有权利益的政治关联董事控制的董事会”(PAWOI)的存在与不良贷款呈正相关。相比之下,“由拥有大量所有权利益的政治关联董事控制的董事会”(PAOI)的存在与不良贷款呈反比关系。这些发现支持了“机构冲突”的观点,并证明了pai和PAOI都不利于孟加拉国的银行贷款绩效,而PAOI对不良贷款的增加没有显著影响。原创性/价值本研究从新兴经济体的角度提供了证据,为现有的银行治理文献做出了贡献,其中政治关联董事(pad)利用宽松的监管监督和投资者保护,以牺牲其他利益相关者为代价,利用其职位谋取个人和/或政治利益。
本文章由计算机程序翻译,如有差异,请以英文原文为准。
求助全文
约1分钟内获得全文 求助全文
来源期刊
CiteScore
5.80
自引率
13.00%
发文量
38
×
引用
GB/T 7714-2015
复制
MLA
复制
APA
复制
导出至
BibTeX EndNote RefMan NoteFirst NoteExpress
×
提示
您的信息不完整,为了账户安全,请先补充。
现在去补充
×
提示
您因"违规操作"
具体请查看互助需知
我知道了
×
提示
确定
请完成安全验证×
copy
已复制链接
快去分享给好友吧!
我知道了
右上角分享
点击右上角分享
0
联系我们:info@booksci.cn Book学术提供免费学术资源搜索服务,方便国内外学者检索中英文文献。致力于提供最便捷和优质的服务体验。 Copyright © 2023 布克学术 All rights reserved.
京ICP备2023020795号-1
ghs 京公网安备 11010802042870号
Book学术文献互助
Book学术文献互助群
群 号:481959085
Book学术官方微信