TY - JOUR
T1 - The causality between corporate governance practice and bank performance
T2 - Empirical evidence from Indonesia
AU - Utama, Cynthia A.
AU - Musa, Haidir
PY - 2011
Y1 - 2011
N2 - The aim of this study is to examine the existence of causality between corporate governance practice and performance of commercial banks in Indonesia. We also investigate the influence of age, capital adequacy, and type of commercial banks on bank performance and examine the influence of the bank size, foreign ownership, and listing status on corporate governance practice. The result shows that corporate governance practice, bank size and capital adequacy ratio have positive influences on bank performance in Indonesia. However, bank performance does not influence corporate governance practice. This study also finds that regional banks have better performance than private banks. The results of the study support the Central Bank's efforts to enhance CG practices in the banking sector, to strengthen banks' capital base and its policy to encourage banks to merge to become larger.
AB - The aim of this study is to examine the existence of causality between corporate governance practice and performance of commercial banks in Indonesia. We also investigate the influence of age, capital adequacy, and type of commercial banks on bank performance and examine the influence of the bank size, foreign ownership, and listing status on corporate governance practice. The result shows that corporate governance practice, bank size and capital adequacy ratio have positive influences on bank performance in Indonesia. However, bank performance does not influence corporate governance practice. This study also finds that regional banks have better performance than private banks. The results of the study support the Central Bank's efforts to enhance CG practices in the banking sector, to strengthen banks' capital base and its policy to encourage banks to merge to become larger.
KW - Bank performance
KW - Corporate governance
KW - Ownership structure
UR - http://www.scopus.com/inward/record.url?scp=84869472011&partnerID=8YFLogxK
U2 - 10.22146/gamaijb.5481
DO - 10.22146/gamaijb.5481
M3 - Article
AN - SCOPUS:84869472011
SN - 1411-1128
VL - 13
SP - 227
EP - 247
JO - Gadjah Mada International Journal of Business
JF - Gadjah Mada International Journal of Business
IS - 3
ER -