Open AccessValue Creation in the Listed Banks: Do Governance Matter?
Author(s) -
Abdul Mongid,
Rr. Iramani,
Muazaroh Muazaroh
Publication year - 2020
Publication title -
international journal of business and society
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.236
H-Index - 15
ISSN - 1511-6670
DOI - 10.33736/ijbs.3302.2020
Subject(s) - corporate governance , robustness (evolution) , business , value creation , accounting , value (mathematics) , margin (machine learning) , sample (material) , net interest margin , balance (ability) , economics , capital adequacy ratio , finance , industrial organization , incentive , microeconomics , medicine , biochemistry , chemistry , chromatography , machine learning , computer science , physical medicine and rehabilitation , gene
We assess the relationship between bank governance practice (GCG), efficiency, capital and risk on value creation in a sample of Indonesia commercial banks using the balance panel methodology. Our results suggest that GCG has a positive impact on value creation and performance. We also find that higher interest margin eventually becomes more profitable, better capitalized and that higher capital levels tend to have a neutral or negative effect on value creation. Efficiency levels are positive to value creation. These results are generally confirmed by a series of robustness tests. The findings convey potentially important implications for bank prudential supervision and underline the importance of attaining better governance to support sustainability and financial stability objectives.