Impact of Corporate Governance on Risk Management and Financial Performance: Evidence from SAARC Region

Abstract

The importance of corporate governance has grown in South Asian countries due to the rising demand for cash and other financial resources from businesses. A risk management committee may be formed, and bank performance can be sustained through good corporate governance, administering an organization following the laws and regulations. This study aims to explore the relationship between corporate governance, risk management, and financial efficiency in both Islamic and traditional banks. With the growing interest in the financial performance of banks, it is important to understand the impact of these factors on the overall efficiency of banks. The study analyzed the influence of corporate governance and risk management on the performance of both Islamic and conventional banks, taking into account bank size as control variable. Good corporate governance practices can improve the risk management of banks and enhance their overall financial performance. Risk management is another important factor that affects the financial performance of banks. Effective risk management practices help banks to identify, assess, and manage potential risks that can impact their financial performance. This study will provide the deep insight of the impact of corporate governance and risk management on the financial performance of banks in SAARC region by taking the data of Islamic and conventional banks from seven countries. Fixed effect regression analysis will be used to find the results. Finally, the study provides recommendations for regulators and policy makers on ways to improve the financial efficiency of banks by increasing their size and internal governance. The findings of the study will be useful for policymakers, regulators, and banks in developing strategies to improve the financial performance of banks, and to promote the stability and prosperity of the banking sector