Corporate governance and non-performing loans: The mediating role of financial performance

Non-performing loans (NPL) for banking are a necessity but a frightening specter. A high NPL indicates a bank's failure to manage its business. The increasingly uncontrollable NPL with a net position of above 5% will make the bank a patient regulator in the category of banks under intensive or...

Full description

Saved in:
Bibliographic Details
Published inCogent business & management Vol. 9; no. 1; pp. 1 - 43
Main Authors Kartika, Indri, Sulistyowati, Sri, Septiawan, Budi, Indriastuti, Maya
Format Journal Article
LanguageEnglish
Published Abingdon Taylor & Francis 31.12.2022
Cogent
Taylor & Francis Ltd
Taylor & Francis Group
Subjects
Accounting
audit committee
Banking industry
Banks
CEO duality
Competitive advantage
Coronaviruses
Corporate governance
COVID-19
Credit risk
Disease transmission
Economics
Financial performance
Fraud
independent commissioner
Information systems
International finance
Loans
non-performing loan
Profitability
Social responsibility
Systems stability
Taxation
Tourism
Online AccessGet full text

Cover

More Information
Summary:Non-performing loans (NPL) for banking are a necessity but a frightening specter. A high NPL indicates a bank's failure to manage its business. The increasingly uncontrollable NPL with a net position of above 5% will make the bank a patient regulator in the category of banks under intensive or special supervision. Therefore, corporate governance (audit committee, CEO duality, and independent commissioners) is needed to stabilize and even minimize non-performing loans in banks' 440 annual financial statements of emerging markets sourced from Bloomberg during 2016-2020. All research data will be processed by structural equation modeling based on partial least squares. The results of this study indicate that the audit committee, CEO duality, and independent commissioners do not affect non-performing loans. At the same time, financial performance positively affects non-performing loans. In other words, the financial performance variable cannot mediate the effect of good corporate governance on non-performing loans. Therefore, this research implies that the banking industry is expected to minimize the ratio of non-performing loans to create a healthy financial performance.
ISSN:2331-1975
2331-1975
DOI:10.1080/23311975.2022.2126123