The Impact of Board of Directors’ and CEO Characteristics on Banks’ Financial Performance

Abstract

Purpose: The study aims to examine the impact of board of directors (BOD) and chief executive officer (CEO) characteristics on the financial performance of joint-stock commercial banks in Vietnam.
Design/methodology/approach: Panel data on 27 banks for 2011–2022 were analyzed using Pooled OLS, FEM, REM, GLS, and GMM models to address endogeneity, autocorrelation, and heteroscedasticity. Variables measuring financial performance include ROA, ROE, and NIM; independent variables reflecting the characteristics of the BOD and CEO include gender, age, education, and share ownership, combined with control variables such as state ownership ratio, political connection, size, economic growth rate, and inflation.
Findings: GMM regression results, internal ownership ratio and education level of the Board of Directors, CEO have positive impact on bank financial performance, age of the Board of Directors and CEO has positive and statistically significant effect, female gender in the Board of Directors and CEO has negative impact, suggesting that gender representation is still a formal role, bank size and GDP growth have positive impact, while state ownership and inflation have negative impact.
Originality/value: The study provides empirical evidence on the relationship between governance characteristics and bank financial performance in the context of emerging markets like Vietnam, and proposes policy implications to improve governance mechanisms, promote transparency and enhance competitiveness of the banking system.