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Role of Board Functions in Bank Performance: Direct and Indirect Effects of Board Independence

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  • Rekha Handa

Abstract

The present study attempts to explore the Indian banking sector from 2007 to 2017 for its performance and for the influence of important characteristics like ownership of banks, board functioning and the effect of independent directors. The results establish that the type of bank has a significant impact on performance metrics, board characteristics and bank-specific features. Moreover, the positive significant influence of board size and board independence is confirmed using panel data analysis. Further, the partially mediating role of independent directors on the relationship of financial performance (measured through return on assets and return on equity) and board characteristics is confirmed using mediation analysis. The present research holds important insights for policymakers, regulators and stakeholders of the banking sector, with a push to reorient their emphasis on board independence and board functioning for better financials of banks in India.

Suggested Citation

  • Rekha Handa, 2022. "Role of Board Functions in Bank Performance: Direct and Indirect Effects of Board Independence," Management and Labour Studies, XLRI Jamshedpur, School of Business Management & Human Resources, vol. 47(3), pages 361-384, August.
    • Handle: RePEc:sae:manlab:v:47:y:2022:i:3:p:361-384
    DOI: 10.1177/0258042X221078486
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