Effect of Corporate Governance on Performance of Financial Institutions:Evidence From Islamic and Conventional Banks of Pakistan

Abstract

This paper examines the impact of Corporate Governance on performance of Islamic
and conventional banks in Pakistan. To achieve ouraim, panel data was collected
fromthe banks‟ annual reportsfor the time period of 2007-2014. This
studyincorporated Board Size, Outside Directors, Board Meetings and Board Gender
Diversity as attributes of corporate governance, whereas, Return on Assets was
adopted to capture banks‟ performance. The results of regression analyses show that,
board size adversely affected the performance of Islamic and conventional banks.
Outside Directors and gender diversity in the board enhance the performance of
banks. A significant link is established between board meetings and performance of
Islamic banks however, this association is negative in case of conventional banks.
Furthermore, the study also investigated the performance of Islamic and conventional
banks during the financial crises (2007-2009) period. The findings show that financial
crises had no significant impact on the performance of Islamic banks. While a
significant declined was observed in the return of conventional banks in the period of
global financial crises, 2007-20091
.