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The effect of board of directors characteristics on risk and bank performance: Evidence from Turkey

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  • Doğan Berna

    (Gaziantep University, Faculty of Economics and Administrative Sciences, Department of Business Administration, Gaziantep—27310, Turkey)

  • Ekşi İbrahim Halil

    (Gaziantep University, Faculty of Economics and Administrative Sciences, Department of Business Administration, Gaziantep—27310, Turkey)

Abstract

A bank, particularly in developing countries like Turkey, is one of the most important institutions in the financial sector. Therefore knowing the factors affecting the performance of banks is important for the development of the sector. One of the factors affecting the risk and profitability of banking sector is the internal factors of the banks. The aim of this paper is to investigate the board of directors’ characteristics and its effect on risk level measured by non-performing loans and on bank performance measured by asset profitability using the Generalized Method of Moments (GMM) estimator. Data from nineteen deposit banks for the period 2012–2018 were used. The result of the study determined that the board size, foreign board members and the independent board members have an effect on both non-performing loans and the return on assets.

Suggested Citation

  • Doğan Berna & Ekşi İbrahim Halil, 2020. "The effect of board of directors characteristics on risk and bank performance: Evidence from Turkey," Economics and Business Review, Sciendo, vol. 6(3), pages 88-104, August.
    • Handle: RePEc:vrs:ecobur:v:6:y:2020:i:3:p:88-104:n:5
    DOI: 10.18559/ebr.2020.3.5
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    More about this item

    Keywords

    corporate governance; bank performance; non-performing loans;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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