Corporate Governance, Regulatory Compliance and Performance of Banks in Sub Sahara Africa

Abstract

ABSTRACT The study assessed the impact of corporate governance on performance as well as regulatory compliance of banks in Sub Saharan Africa. The study adopted the quantitative method approach. The quantitative data was collected from the annual report of the banks from 2011 to 2020. The study used the system generalized method of moment two step estimator with 41 listed banks from five Sub Sahara African countries. The results revealed that board size, board independence, audit committee, board diversity, managerial ownership and ownership concentration predict performance when measured with return on asset. The study also found that board size, board independence, audit committee, board diversity, institutional ownership and ownership concentration were predictors of performance with net interest income. All the variables were also predictors with the exception of institutional and concentrated managers with return on equity The study also revealed that board size, board independence, audit committee, board diversity and managerial ownership were predictors of regulatory compliance. With respect to the moderating effect of type of bank on the relationship between corporate governance and performance, type of bank significantly moderates the relationship between corporate governance and return on asset. Apart from institutional ownership which was significant, the moderating effect of type of bank were all insignificant on the relationship between corporate governance and regulatory performance. The study concluded that corporate governance predict performance as well as regulatory performance. It is recommended that, regulators should from time to time, modify and update the corporate governance guidelines to meet the current trend of business and best practices