Political connections on board of management and banking performance: Evidence from Indonesia

Raja Nisrina Jasmine, Rofikoh Rokhim, Arif Rahman Hakim

Research output: Contribution to journalArticlepeer-review

Abstract

This research aims to analyse the connection between political connection of the board of directors and board of commissioners and bank performance in Indonesia from 2007 to 2017. We use the data from all banks with several dependent variables return on asset and Z-score to measuring the banking performance and various independent variables, such as, board of directors and commissioners' political connection, board characteristics and bank specifics. The results showed that political connection of the board of directors and commissioners leads to a good performance in each bank. This is because political parties and other government agencies would want to show good reputation by giving good talents and insights in banks to increase their performance and the nation's economic condition. Banks with political connection would also get several advantages, such as, less risky loans given to firms with the same political connection.

Original languageEnglish
Pages (from-to)219-231
Number of pages13
JournalInternational Journal of Economics and Management
Volume14
Issue number2
Publication statusPublished - 2020

Keywords

  • Bank performance
  • Commissioners
  • Directors
  • Political connection

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