Examining corporate governance's influence on financial performance in Vietnamese Banks

Abstract

Various theories and empirical studies have been applied and proposed to establish and explain how corporate governance practices are related to banks' financial performance. Using the agency theory, the stewardship theory and resource dependent theory, this study investigates the effect of corporate governance on Vietnam-listed banks' performance. It tests the influence between bank performance (measured by ROA and ROE) and selected factors of corporate governance mechanisms, such as board size, independent directors, and female board members. Return on assets and return on equity are used as proxies for bank performance. The control variables used in this study include bank size, real GDP, state ownership, and bank holding structure. The study used financial and corporate data from 19 banks, covering a period from 2015 to 2022. The methodologies adopted in this research include descriptive analysis, correlation analysis, and regression analysis. In this study, the findings indicate that female board members have a negative effect on bank performance. Board size is negatively related to bank performance; however, the result is not significant. Independent directors are found to have a positive influence with bank performance, but the results are not significant.