Corporate Governance Practices and its Impacts on Financial Performances: The Case of Zemen Bank Share Company
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Date
2021-03
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A.A.U
Abstract
There has been a great deal of attention given to the issue of corporate governance in recent times. To date, the studies made on different aspects of corporate governance largely have focused more on developed economies than emerging economies.
Most of the previous research conducted on the Government owned banks including state owned Commercial Bank of Ethiopia and Construction Bank of Ethiopia. The student researcher also noticed inconsistent results of the previous studies about the Corporate Governance practices of banks in Ethiopia.
This research asses the Corporate Governance practices in one of the private banks in Ethiopia, Zemen Bank S.C and assess the impact of board Corporate Governance variables (board size, board diversity, board sub-committees, Board members educational qualifications and board meetings) on the bank financial performance(ROA).
The research applied mixed method approach in the collection and analysis of the data. The qualitative data were collected both from the primary (Questionnaire and Interview) and secondary sources. The findings from the quantitative data analysis based on the regression analysis showed that the board size has positive and significant impact on the financial performance of the bank. The findings also indicated a positive and significant relationship between board diversity and financial performance of the bank. Furthermore, the study revealed that board performance evaluation, corporate governance rating of the bank and Board of directors tailored corporate governance training contribution to improve the Zemen bank financial performance (ROA).
This research examines the existing Corporate Governance practices according to the National Bank of Ethiopia and internationally accepted best practices. It forwards recommendations that improve the current practices. Thus, this provides the incentive for other student researcher to contribute and narrow the knowledge gap in this area. This study, therefore, contributes its share to the literature in general for Corporate Governance practices and specifically for the development of the private banking sector in Ethiopia
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Keywords
Corporate Governance; Board Size, Board Diversity; Bank Performance