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The Impact Of Board Composition And Activity On Non-Performing Loans, Md Nurul Islam
The Impact Of Board Composition And Activity On Non-Performing Loans, Md Nurul Islam
2020 Awards for Excellence in Student Research and Creative Activity
This paper examines the impact of board composition and activity on bank non-performing loans (NPLs). The empirical evidence suggests that NPLs are negatively related to board independence, separation between the CEO and chairman roles, directors with financial expertise, and the frequency of committee meetings. Additionally, we find that, during the financial crisis period (2008–2009), a large board size and the presence of female directors may also help lower NPLs. The results support the hypothesis that shareholder-friendly bank boards and active boards are more effective monitors, and thus help lower bank’s NPLs.