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Strengthening financial sustainability through corporate governance: a study on commercial banks of Bangladesh

Author

Listed:
  • Md. Shahidul Islam Zahid

    (Professor, Department of Banking and Insurance, University of Dhaka)

  • Md Golam Ramij

    (University of Dhaka)

Abstract

This study investigates the relationship between banks' corporate governance practice and its impact on financial sustainability. In this study, twenty-four private commercial banks' data have been analyzed from 2014 to 2023. Our investigations included a variety of econometric models, including cross-sectional GLS, fixed effect, random effect, and pooled OLS. In our study, we found that including women on the Board of directors plays a positive role in ensuring the financial sustainability of banking sectors in Bangladesh. Apart from that, increasing the participation of independent directors on the board of directors, expenditures in research and development in the best banking practices, and inflation positively increase banks' profitability, which translates into financial sustainability. This finding is consistent with the findings of the random effect model. On the other hand, whenever we used ROE as an explained variable, we found that both in pooled OLS and random effect methods, board diversity, CEO tenure, firms audited by the big four firms, and inflation have a positive association with ROE. In the fixed effect method, we observed that audit committee size and ownership concentration play a vital role in explaining the financial sustainability of private commercial banks in Bangladesh. In the FGLS method, We found that CEO tenure, age of the firm, firms audited by the big four firms, presence of the independent director on the board, and inflations significantly impact the financial sustainability of commercial banks of Bangladesh. Key Words:Sustainability, Corporate Governance, ROA, ROE

Suggested Citation

  • Md. Shahidul Islam Zahid & Md Golam Ramij, 2025. "Strengthening financial sustainability through corporate governance: a study on commercial banks of Bangladesh," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 14(3), pages 207-217, April.
    • Handle: RePEc:rbs:ijbrss:v:14:y:2025:i:3:p:207-217
    DOI: 10.20525/ijrbs.v14i3.4005
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