The Impact of Board Characteristics on the Performance of Banks in the MENA Region

Purpose: This paper examines the impact of board characteristics on bank performance variability in the Middle East and North Africa (MENA) region. Design/Methodology/Approach: Using a sample of 97 banks from the MENA region over the period 2016–2020, the study investigates the effect of four corporate governance mechanisms on two bank performance measures: return on assets (ROA) and return on equity (ROE). Additionally, three control variables are included to isolate the impact of corporate governance characteristics on bank performance. Panel data regression techniques are employed for empirical analysis. Findings: The results indicate that board size, CEO duality, and the presence of institutional directors on the board have a positive and statistically significant effect on return on assets (ROA). Board size exhibits a negative and significant relationship with return on equity (ROE), whereas the presence of institutional directors has a positive and significant impact on ROE. Practical Implications: The findings provide valuable insights for regulators, policymakers, and bank stakeholders in the MENA region by highlighting the importance of board structure in enhancing bank performance. Improving board composition and governance practices may contribute to stronger financial outcomes and greater stability in the banking sector. Originality/Value: This study contributes to existing literature by offering empirical evidence on the relationship between board characteristics and bank performance in the underexplored MENA region. It enhances understanding of how specific governance mechanisms influence different dimensions of bank performance.