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Nexus between corporate governance and bank stability: an empirical study on the banking sector in India

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  • Nidhi Garg
  • Shubham Garg
  • Sangeeta Mittal
  • Sanjeev Kumar

Abstract

This study endeavours to explore the effect of corporate governance on the stability (measured by capital adequacy ratio) of public and private sector banks in India by covering the dataset from 2012-2013 to 2021-2022 by employing panel regression modelling. The result explicates that out of corporate governance variables, the board composition is inversely related to bank stability (CRAR). In contrast, CEO duality is positively related with bank stability. Moreover, board size, gender diversity and board meeting are insignificantly related to bank stability. Similarly, the result posits a significant association of leverage, bank's activity level and bank size with the stability of banks. The findings of the study entails that banks should adequately assess the loan risk to maintain enough capital to have more stability and should adequately plan for capital allocation. This may be the first study to explore the capital adequacy ratio as a measure of bank stability in the Indian banking context.

Suggested Citation

  • Nidhi Garg & Shubham Garg & Sangeeta Mittal & Sanjeev Kumar, 2025. "Nexus between corporate governance and bank stability: an empirical study on the banking sector in India," Global Business and Economics Review, Inderscience Enterprises Ltd, vol. 33(2), pages 154-175.
    • Handle: RePEc:ids:gbusec:v:33:y:2025:i:2:p:154-175
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