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Bank nominee directors and corporate performance: micro evidence for India

  • Nachane, D M
  • Ghosh, Saibal
  • Ray, Partha

Banks and financial institutions play a major role in governance of non-financial companies in India through the mechanism of nominee directors. This paper probes two allied issues: firstly, the isolation of the firm specific factors which determine the presence of bank nominee directors on boards and secondly, whether companies, with bank nominee directors exhibit better performance/governance than companies with no banker representation on their boards. A Probit model estimated over a cross-section of Indian manufacturing firms for 2003, indicates that bankers on boards seem to exert a healthy impact on the companies. In fact, large public limited companies are likely to exhibit banker representation, primarily in their role as expertise providers. The evidence from Tobit model reconfirms these results.

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File URL: https://mpra.ub.uni-muenchen.de/2707/1/MPRA_paper_2707.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 2707.

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Date of creation: 19 Mar 2005
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Publication status: Published in Economic and Politcal Weekly 12.40(2005): pp. 1216-1223
Handle: RePEc:pra:mprapa:2707
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