Impact of Corporate Governance on Profitability of Banking Sector of Pakistan

Abstract

There are many studies conducted to evaluate the impact of corporate governance on firms' profitability in the context of Pakistan, but the Banking sector is far behind in his assessment. This thesis aims to scrutinize the impact of corporate governance indicators, including CEO duality, Board Size, Independent directors, Non-Executive director, Risk management committee, and Audit Committee on profitability by targeting the fourteen conventional banks of Pakistan. To investigate the impact of corporate governance on profitability, this thesis examines the data from the period of 2008 to 2019. This thesis will use the panel random effect model of regression to determine the impact of corporate governance indicators on banks' profitability in the developing economy of Pakistan. The finding of this study is beneficial for conventional banks to strengthen their financial performance by improving the CG structure. It will provide the framework for implementing a broader and more diverse CG system that will improve and strengthen conventional banks' capacity to tackle corruption and serve as defensive mechanisms. To formulate effective policies on the subject of corporate governance measures; this thesis's finding provides a detailed insight to policymakers, because good corporate governance practices encourage investors to invest and motivate other stakeholders to be satisfied with the company results.