Abstract:
The special nature of banking business requires the implementation of more
specific and complex mechanisms for banking governance. Banking governance is
conceived primarily to establish an effective banking structure with full potentiality
in the financing of the economy. This study is an attempt to investigate the impact of
corporate governance on bank efficiency of listed licensed commercial banks in Sri
Lanka. This research focused on secondary data collection method which
information drawn from 8 licensed commercial banks during the period of 9 years from 2007 to 2015 on basis of Random sampling method. This study considered
corporate governance as the independent variable which measured by Board size
and Board Independence. The bank efficiency is considered as dependent variable
which measured by Non performing loan ratio and Non performing assets ratio. In
this research study used for Bank size as control Variables. The descriptive statistics
are used and Pearson's correlation coefficient is used to identify the relationship
between corporate governance and bank efficiency. The regression analysis is used
to identify the impact of corporate governance on bank efficiency. The results of this
study reveal that Board independence has a significant impact on NPLR of listed
licensed commercial banks in Sri Lanka. It can be concluded that there is a positive
relationship between corporate governance and bank efficiency also the banking
system which efficiently channels financial resources to productive use is a powerful
mechanism for economic growth.
